KARACHI: Pakistan’s ability to raise funds from global financial markets at a record-low rate shows investors’ optimism about Pakistan’s economic prospects, said a research report by Topline Securities.
Pakistan has raised $1 billion by issuing five-year Islamic bonds (sukuk) at 5.5 per cent. Pakistan witnessed total interest of $2.4bn from across the world. Out of total bids received, 38pc were from Europe, 27pc from North America and 6pc from Asia.
This new sukuk issue compares favourably with the previous five-year sukuk that was floated in December 2014 at the rate of 6.75pc. Furthermore, the government floated its last 10-year eurobond at 8.25pc in 2015.
Pakistan’s credit rating has remained stable or improved during the last few years. International credit rating agencies, Moody’s, Fitch and Standard & Poor’s rated Pakistan as B3 (stable), B (stable) and B- (positive), respectively, in their last ratings.
The issue of sukuk at a low rate is a strong indicator of Pakistan’s rating improvement in the future, said the report. The issue could have been at an even lower rate had the Line of Control flare-up not happened. Comparable bonds of other countries with similar ratings have been floated at about same rates.
For instance, Egypt (S&P: B-) floated its 10-year eurobond in 2015, raising $1.5bn at 5.875pc. Similarly, Kenya’s (S&P: B+) five-year and 10-year bonds worth $2bn were floated in 2014 at 5.875pc and 6.875pc, respectively.
Sri Lanka (S&P: B+) also raised during this year $1.5bn in five-year and 10-year bonds at the rate of 5.75pc and 6.825pc, respectively.
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