Pakistan launching Eurobond to boost foreign currency reserves

ISLAMABAD: Pakistan is going to launch $500 million to $1billion Eurobond in New York, USA, just ahead of Eidul Azha in order to boost foreign currency reserves up to $20 billion mark.
It is yet to see how pricing will be determined on the demand of Pakistani paper from international investors as it will help Islamabad for meeting IMF condition to build up foreign currency reserves as well as reducing domestic debt burden.
Of total public debt of Pakistan, there is heavy reliance on domestic debt and whatever amount will be raised through upcoming Eurobond the equivalent rupee component of public debt will be retired.
The domestic debt is more expansive than foreign debt but dollars cannot be printed in Pakistan whereas rupee can be printed, having consequence of surging inflation.
Finance Minister Ishaq Dar has left Islamabad for New York to attend the road shows being organised in connection with launching of Eurobond. “It is expected that the transaction will be completed in New York on September 23 and 24, 2015, to fetch around $1 billion mark,” official sources confirmed to The News here on Tuesday.
The road shows commenced at London on September 18 with Secretary Finance Dr Waqar Masood and Governor State Bank Ashraf Mahmood Wathra having meetings with leading investors, senior representatives of reputed banks, multinational companies and known financial institutions.
Thereafter they proceeded to the United States and conducted a road show in Los Angeles on September 21. The third road show was held in Boston on Tuesday. Ishaq Dar will lead the Pakistan team at the 4th road show in New York today (Wednesday). At the end of the road shows, the pricing of the bond is scheduled on September 24.
Meanwhile, the Pakistan Bureau of Statistics (PBS) has released data showing the latest profile of Large Scale Manufacturing (LSM) sector in the country. The statistical details in this regard were submitted to the finance minister here Tuesday which reveal growth of 4.67 % in LSM in July 2015 as compared to 1.40 % in the corresponding month last year.
The major groups that contributed in the growth included automobiles which registered growth of 52.5 %, fertilizers 19.1 %, chemicals 15.2 % and leather products which have registered a growth of 10.8 %.
The PBS also informed the minister that due to revision in indices the LSM growth of FY15 is now 4.96 % as compared to 4.08 % for FY14.
This is a welcome development for GDP growth of FY 15. The previous provisional LSM growth of FY15 was estimated at 3.32 %.
Minister Dar expressed satisfaction over the positive trend in the LSM growth and said that the government was doing all it could to facilitate every sector of the economy. He said after achieving economic stability the government now has its eyes set on sustainable and inclusive growth and the profile of the LSM sector augurs well for attaining this objective.