Pakistan raises another $1b through Eurobond
Pakistan raised additional debt of $1 billion through a tap issue of its recently issued three-tranche dollar denominated Eurobond that had fetched $2.5bn in March.
The bond was subscribed in excess of $3bn for five, 10 and 30 years. Pakistan accepted $300m for five-year note at 5.875pc, $400m for 10-year bond at 7.125pc and $300m for 30year paper at 8.450pc.
Pakistan had adopted a programme-based approach with the registration of Global Medium-Term Note (MTN) programme, which allows it to tap the market regularly and at a short notice, Fahad Rauf, head of research at Ismail Iqbal Securities, told Dawn.
MTN allows continuous or intermittent fund raising from the investors through the designated or appointed dealers. Under this programme, a bond is registered only once. However, the issuer can enter the foreign markets more easily to obtain capital under the MTN.
Pakistan gave initial price guidance of 6-6.125pc for a five-year tranche due in 2026, around 7.375pc for 10-year bonds maturing in 2031 and around 8.875pc for 30-year note due in 2051. "The timing of tap issue is critical as currently the interest rates are low globally and the market has ample liquidity," Fahad said.
Pakistan's external financing needs are growing where the net external financing target through commercial sources for FY22 is around $5.5bn, out of which Eurobond/sukuk issuance is targeted at $3.5bn, he added.
The IMF programme is also on hold, which may become a challenge to raise funds in future. "Thus, it is better to tap the markets now. Pakistan's external account situation is also better now; but some pressure could be witnessed in future as indicated by the rising trade deficit," he argued. Credit Suisse, Deutsche Bank, Emirates NBD Capital, JPMorgan and Standard Chartered are arranging the deal.
Aftab Ahmed Chaudhry, who has headed Lahore and Islamabad stock exchanges before creation of Pakistan Stock Exchange, said the initial objective was to raise up to $1bn. He said it was right time for the tap issue with markets having ample liquidity. This will help reduce pressure on external account and currency, he added.
Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood said that Pakistan's exports to the United States (US) during fiscal year 2021 increased by 39 percent as compared to last year 2020.
In a tweet, he said that Pakistani exports to US were recorded at $ 5.2 billion as compared the exports of worth $ 3.7 billion of last year, showing increase of $1.45 billion.
"This is the first time in our history that our exports to the US have crossed the $5 billion mark," he added.
He commended the efforts of exporters and Trade and Investment Officers (TIOs) in the US. He urged the TIOs at Pakistan's trade missions in New York and Houston to provide all possible facilitation to the exporters for enhancing exports further.