Pakistan to cough up $1.5bn as two bonds mature next fiscal

ISLAMABAD: Pakistan’s external debt repayments are projected to jump up in the upcoming budget amid Islamabad’s obligations to clear two major obligations on the maturity of Eurobonds worth $1.5 billion.

In the wake of increased debt repayment requirements in the coming budget 2025-26, Pakistan will have to explore its options to re-appear on the radar screen of the international capital market for launching international bonds, including Eurobond and Sukuk, as well as Panda bond in the next fiscal year.

This will all depend upon the appetite of the market and the mark-up rates prevailing in the US and other markets. After qualifying for the first review and release of the second tranche from the IMF, Pakistan expects further improvement in credit rating from international rating agencies, so the country is all set to launch international bonds in the coming fiscal year. The government made efforts to launch a Panda bond in the outgoing fiscal year but failed to deliver. There are increased requirements to enter into Chinese market, so Panda bond is expected to be launched in the next fiscal year with a first issuance of $200 to $250 million.

“There are two major repayments that will become due on maturity of Eurobonds, one will be due in September 2025, worth $500 million, which was launched for 10 years, backed in 2015 at the rate of 8.25 percent. The second repayment will become due on maturity of Eurobond worth $1 billion, which was launched in April 2021 at the rate of 6 percent for five years,” top official sources confirmed while talking to The News here on Wednesday. Total external debt and liabilities are still being worked out, although the budget-makers are engaged to firm up figures on total dollar inflows and outflows on account of foreign loans and grants. In this ongoing week, the Economic Affairs Division and Ministry of Finance high-ups continued consultations to workout total dollar inflows in shape of program and project loans and outflows as external debt servicing but one thing was clear that the external debt servicing might go up keeping in view two heavy repayments owing to maturity of Eurobonds. Another debt repayment for international bond which was launched in April 2021 worth $1 billion would be matured in 2031 as this international bond was issued at the rate of 7.3 per cent. The government had launched another international bond in January 2022 to generate $1 billion for seven years and it would be matured in 2029.