Pakistan Plans $2 Billion of Bonds Amid Record Asian Sales - Bloomberg
Pakistan Plans $2 Billion of Bonds Amid Record Asian Sales
By Tanya Angerer and Lyubov Pronina Apr 8, 2014 11:00 AM ET
Pakistan is marketing $2 billion of bonds, its first international sale since 2007, as the country seeks to bolster its reserves after a record quarter for sovereign note sales in Asia.
South Asia’s second-biggest economy is offering $1 billion of five-year notes at a yield of 7.25 percent and the same amount of 10-year securities at 8.25 percent, a person familiar with the matter said. Sri Lanka sold $500 million of five-year debt at a 5.125 percent yield yesterday after governments in Asia outside Japan raised $6.5 billion selling bonds last quarter.
Pakistan, Asia’s lowest-graded country with a Caa1 rating at Moody’s Investors Service, is seeking to increase its reserves to receive more International Monetary Fund loans. The IMF agreed to lend the nation, which is suffering from power shortages and a Taliban insurgency, about $6.8 billion in September and will approve a tranche of about $556 million conditional upon satisfactory fiscal and structural reforms.
Pakistan “has made significant strides in improving its policy making and economy under the auspices of a strong IMF program,” Alexander Moseley, a senior portfolio manager in New York at Schroders Plc, which oversees $87 billion in fixed-income assets globally, said by e-mail.
Its “new issue offers good value,” he said.
Outperforming Bonds
Pakistan’s bonds have been outperforming their Asian and emerging-market peers since the beginning of 2013, led by the election of “reform-friendly” Prime Minister Nawaz Sharif and the start of a new IMF program, Standard Chartered Plc analysts led by Jaiparan Khurana in Singapore said in a note last month. The program provides some relief to the country’s balance-of-payments position, according to the note.
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Our base case is that credit metrics will stabilize from here, and have the potential to improve further if the reform program stays on track,” the analysts said.
Returns on dollar debt from Pakistan and Sri Lanka are the highest in Asia this year, HSBC Holdings Plc indexes show, gaining 19.15 percent and 6.11 percent respectively.
The yield on Pakistan’s June 2017 dollar bond fell three basis points today to 6.47 percent, 134 basis points below this year’s high on Jan. 6, data compiled by Bloomberg show.
