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Govt plans to launch Eurobond to generate up to $1 bn

March 26, 2021

ISLAMABAD: In the aftermath of revival of the IMF sponsored $6 billion programme for Pakistan, the government plans to launch Eurobond in the international capital market probably within next few days in order to generate $750 million to $1 billion. It will be the first transaction in the last two and a half years rule of PTI-led regime when Pakistan re-appears on the radar of international investors.

The PTI had opposed the issuance of international bonds when sitting on opposition benches especially asset-backed Islamic Sukuk bond. After facing stiff opposition from the cabinet for placing F-9 Park as asset guarantee for launching Sukuk bond, the Ministry of Finance ultimately decided to go ahead with launching of Eurobond because it could be launched with the help of sovereign guarantee instead of placing any asset as a guarantee for moving ahead.

The Ministry of Finance, in its latest communication, sent out to Governor State Bank of Pakistan, Chairman CPEC Authority, Federal Board of Revenue, Ministry of Foreign Affairs, Power Division, Petroleum Division, Privatisation Commission, Board of Investment, Ministry of Planning and Attorney General of Pakistan that it intends to issue Eurobond in international capital market during this week for which a global announcement will take place shortly.

The announcement of deal/transaction will be followed by presentation to potential investors and Question and Answer (Q&A) sessions spread over two days on March 25 and March 26, 2021. As investors could raise any questions not limited to economy so the representatives of all ministries and departments are requested to depute a senior level officer to answer different queries raised in these sessions.

“The size of the Eurobond has not yet been firmed up as it will be determined keeping in view the appetite of the international market but there are indications that Islamabad may opt to go ahead with launching of Eurobond worth $1 billion” said top official sources while talking to The News here on Thursday.

The hired financial advisors conducted in house deliberations to finalise strategy for narrating Pakistan’s economic story in front of international investors. Ministry of Finance had to face an embarrassing situation when it moved a summary for launching Sukuk bond on the basis of F-9 Park Islamabad holding it as asset back for launching this bond but the cabinet members opposed it tooth and nail.

Finally, the Cabinet directed the Ministry of Finance to come up with a new proposal for mortgaging any other asset for issuing this bond. The increasing political turmoil might increase woes for the government on economic front in months ahead. In order to achieve Net International Reserves (NIR) targets under the IMF condition, the State Bank of Pakistan will have to jack up foreign currency reserves on quarterly basis.

The building up of foreign currency reserves is the major target under the IMF programme so the government will have to depend upon rollover of loans and raising of multibillion dollars through issuance of international bonds in months to come.