Pakistan selling $2.5 billion bond

[Last starfighter]

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Pakistan Selling $2.5 Billion of Bonds After IMF Bailout Resumes
By
Faseeh Mangi
and
Ameya Karve
30 March 2021, 08:35 BSTUpdated on 30 March 2021, 17:25 BST

• Borrowing via three-part dollar bond, including 30-year debt
• Nation replaced finance minister a day before marketing deal
• 
  
  
• A street vendor sells face masks in Karachi. Photographer: Asim Hafeez/Bloomberg
  
  Pakistan is selling a $2.5 billion dollar bond that will be a key test of investor sentiment after the resumption of a $6 billion bailout program with the International Monetary Fund.
  
  
  
  
  The South Asian nation is offering the notes in three parts, people familiar with the matter said, asking not to be identified because they’re not authorized to speak about it.
  
  
  The debt deal comes amid a flurry of developments in recent days, as Pakistan’s economy grapples with continued fallout from the pandemic. Prime Minister Imran Khan named a new finance minister on Monday, its third finance chief in less than three years. The IMF was set to release about $500 million to the country as the lender’s board completed certain reviews of a $6 billion bailout program, according to a statement last week.
• Pricing for the offering is as follows, according to the people familiar:
  
  
  
  • The $1 billion five-year note will yield 6% after initial discussions of 6.25% area
  • The $1 billion 10-year note will yield 7.375% after initial discussions of 7.5% area
  • The $500 million 30-year bond will yield 8.875% after initial discussions of 8.875%-9%
  Fair value is at high-5% for the five-year securities, low-7% for the 10-year portion and high-8% for the 30-year bond, according to Nicholas Yap, credit analyst at Nomura International (HK) Ltd.
  
  
  
  The “bonds should see decent investor demand following a number of positive developments in the country of late” including the IMF loan resumption, Yap wrote in a report Tuesday.
  
  The government plans an “international Sukuk transaction sometime after the Eurobond issuance,” the finance ministry said in a reply to questions last week. The country expected to raise more than $1.5 billion in global bonds if market conditions remained conducive, Muhammad Umar Zahid, director of debt at the ministry, said last month.
  
  Credit markets have been busy this quarter, despite a run-up in rates in recent weeks. The Maldives, another non-investment grade sovereign borrower, sold a $200 million dollar five-year Sukuk security this week at 10.5%.
• Pakistan is raising funds through the global market for the first time after pricing $2.5 billion of securities in 2017.
  
  It’s doing so as the foreign exchange market sends more bullish signals.
  
  Pakistan’s rupee has advanced to around its highest level against the dollar in nearly two years. It has gained about 4% so far in 2021, the only currency to strengthen against the dollar in Asia, according to a basket of currencies compiled by Bloomberg.
  
  — With assistance by David Caleb Mutua, and Allan Lopez
  
  (Updates with launch details throughout.)

 

[Crimson Blue]

Pakistan Attracts $5.3 Billion Dollars For A $2.5 Billion Dollar Euro-Bond Float.
This offer was over subscribed.

https://twitter.com/x/status/1376960815945773057

 

[FuturePAF]

I hope this money is spend to fund efforts that will generate more profit then the interest rate this money is borrowed against.

Also if there is this much demand, it probably means the interest rate offered was too high. Investors don’t think they could get this much over the next few years, in other global markets, and would rather go for a sure thing.

Pakistan will serious need to spend that money wisely. The country will need to be laser focused on becoming more efficient and doing more with less. Proper management of water to maximize agricultural outputs, to generate exports and raw materials to supply the garment industry. Getting a petrochemical industry setup so a pharmaceutical industry and medical devices industry can thrive when the world is in dire need of medications and supplies during this pandemic. Finding innovative ways to attract African and Middle eastern countries (that’s right, prioritizing emerging markets over developed one, because they maybe more likely to be persuaded if we can market our services well) to bring their ships to Gwadar and Karachi, so they can ship overland (in the empty containers going back to China, after they had shipped good to Pakistan) on Pakistani roads and rail to China.

This money could also be spend on buying up bankrupt foreign companies with key technologies that can feed into out export strategy. Brands with deep roots in major markets, through which we can market our own products.

next time they look to issue these bonds, they should find a way to gauge potential interest, competing bond offerings and calibrate interest rate offerings accordingly.

otherwise, let’s see what they do with the money raised. Cautiously optimistic.

 

[Crimson Blue]

Does anyone know what was the interest rate on the Euro Bonds issued by Pakistan during PPP & PML(N) government?