By Staff Reporter
KARACHI: Pakistan raised $3 billion on Thursday in its biggest two-part international bond sale on record, capping a run of three deals this year that has taken the country from a four-year absence in Eurobond markets to its largest-ever sovereign debt sale.
The government sold $1.75 billion of five-and-a-half-year notes at a yield of 7.75% and $1.25 billion of 10-year notes at 8.25%, according to people familiar with the matter who spoke to Bloomberg on condition of anonymity. The finance ministry, in a statement announcing the deal, put the coupons somewhat lower, at 7.50% and 7.90% — a gap between the government’s stated terms and Bloomberg’s reported pricing that remains unresolved.
Notably, the 10-year yield matches the rate on Pakistan’s last most expensive Eurobond, raised more than a decade ago under the PML-N government; that earlier bond reached maturity a couple of years ago and has since been repaid.
The ministry said the sale drew close to $6 billion in orders, nearly double the amount allotted, from what it described as a broad, geographically diversified base of institutional investors.
“Pakistan has successfully issued $3 billion through a landmark dual-tranche Eurobond transaction, the largest-ever international bond issuance by Pakistan in a single transaction,” the ministry said in a statement posted on X. “The transaction attracted nearly $6 billion in orders — almost twice the amount issued — from a broad and diversified base of institutional investors across global markets and continents.”
Officials characterised the demand — particularly for the 10-year tranche — as a market-based vote of confidence in the country’s improving fundamentals, distinct from and reinforcing the recent run of rating upgrades.
“The successful transaction marks a major milestone in Pakistan’s renewed and increasingly diversified access to international capital markets, demonstrating strong investor confidence and Pakistan’s ability to access global funding markets at significant scale.”
Citigroup Inc., Deutsche Bank AG, Emirates NBD Capital, MUFG and Standard Chartered Plc managed the sale as joint bookrunners. S&P Global Ratings and Fitch Ratings both rated the notes in line with Pakistan’s sovereign credit score — B and B-, respectively — placing the debt firmly in speculative-grade territory, commonly known as junk.
Managing the Balance Sheet, Not Just Borrowing
Officials framed the sale as more than a fundraising exercise. The ministry said it forms part of a deliberate strategy to actively manage Pakistan’s sovereign liabilities — diversifying funding sources, lengthening maturities, and using longer-duration, competitively priced debt to displace shorter-term, costlier obligations where doing so makes economic sense. It pointed to Pakistan’s early retirement of some domestic debt as evidence of the same discipline being extended to external borrowing.
That framing — extend maturities, diversify funding, cut refinancing risk — is one the ministry has repeated across its recent market appearances, and Thursday’s sale is roughly 50% larger than the $2 billion the government had signalled in its own budget documents for the current fiscal year, suggesting officials moved to capture stronger-than-expected demand rather than stick to their original target.
Thursday’s deal builds on a string of transactions that have reopened Pakistan’s access to international capital after a four-year absence. The country returned to the Eurobond market in April with a $500 million three-year note priced at 6.975%, later increased to $750 million through a green-shoe option. It followed that in May with its first-ever Panda bond, a CNY1.75 billion ($250 million) sale in China’s onshore market.
The ministry described Thursday’s sale as the first issuance under Pakistan’s newly established Global Medium-Term Note Programme, which it has cast as a platform for more routine, diversified market access going forward rather than one-off transactions tied to specific financing needs.
Ratings Improve, But Agencies Flag Caveats
The bond sale followed closely on two ratings upgrades that the ministry cited directly as context for the deal. Moody’s Ratings raised Pakistan to B3 from Caa1 on August 24, citing a stronger external position, improved fiscal metrics and lower domestic borrowing costs. S&P had lifted its rating to B from B- in July.
Both agencies paired their upgrades with warnings that stand in some tension with the ministry’s framing. Moody’s said Pakistan’s debt affordability, while improved, “remained weak” and would continue to constrain the rating, and separately flagged weak rule of law and limited government effectiveness as ongoing risks. Interest payments still absorbed about 35% of government revenue in the last fiscal year — down from 49% the year before, but still a heavy claim on the budget by the standards of higher-rated sovereigns.
Foreign exchange reserves have been a bright spot the government has leaned on in its own messaging. They climbed to around $17 billion by the end of July, from about $14 billion a year earlier, giving Pakistan roughly three months of import cover, according to Moody’s, which credited the buildup in part to continued implementation of Pakistan’s IMF-backed reform program.
In its statement, the ministry cast the sale as the culmination of a three-year arc it summarized as moving from crisis to stabilization, reform, credibility, rating upgrades and now investor confidence — and said the work is not finished, pointing to fiscal discipline, structural reforms and export competitiveness as areas still requiring sustained progress. “The journey is not complete,” the ministry said.
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