Karachi: Pakistan has prepared to repay one billion dollars of Eurobonds.
Pakistan has prepared to repay one billion dollars of debt when ten-year Eurobonds mature from mid-April 2024. This payment will reduce the debt obtained by selling Eurobonds and Sukuk in the international market to less than $7 billion.
The State Bank told The Express Tribune that the State Bank is ready to repay the bond loan at any time and is awaiting the direction of the Finance Ministry in this regard. The Eurobonds mature on April 15, 2024.
After Pakistan’s foreign exchange reserves surged past $8 billion, Eurobond prices hit record highs with one bond touching $1 on expectations of Pakistan paying global investors early or on time.
Mohammad Sohail, CEO of Topline Securities, said that despite the crisis in foreign exchange reserves, Pakistan had pre-paid the one billion dollar Eurobond maturing in December 2023. The creditworthiness of Pakistan’s 2024 bonds has increased by 160% over the last 18 months.
State Bank Governor Jameel Ahmed, while briefing analysts last month, said that Pakistan has made arrangements to repay all the loans maturing in the financial year 2023-24.
Muhammad Sohail said that Pakistan had not only repaid the Eurobond debt in 2023 but also succeeded in maintaining its foreign exchange reserves at $8 billion. Pakistan’s current foreign exchange reserves are $8 billion, of which $5 billion are held by commercial banks.
He said that earlier in February 2023, Pakistan’s foreign exchange reserves had fallen to an alarming level of $3 billion and there was a fear of bankruptcy due to the failure to repay the bonds. Pakistan’s foreign exchange reserves will decrease after the repayment of one billion dollar Eurobonds. However, on the other hand, the 1.1 billion dollar installment is likely to be received from the IMF at the end of April.
Foreign portfolio investors buying shares and T-bills from the Pakistan Stock Exchange and the State Bank getting dollars from the market are also giving Pakistan an opportunity to manage regular debt repayments. The value of the $500 million Eurobonds maturing in September 2025 also rose following the staff-level agreement with the IMF last month. It is now trading at 96.2 cents per US dollar.
The value of Eurobonds and Sukuk of Pakistan circulating in the international market is 7.8 billion dollars. All these will expire by April 2051.
Caretaker Finance Minister Dr. Shamshad Akhtar has decided not to introduce new bonds in the global market. The stability of the Pakistani currency has also boosted the confidence of foreign investors in Pakistan’s economy and its debt instruments.
According to a report by Topline Research, the Pakistani currency has emerged as the best performing currency in the region. The currency has appreciated by 3.1 percent so far this year.
