Pakistan raises $2.5bn in return to global bond market

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Pakistan returned to the global bond market for the first time in over two years, successfully raising $2.5bn on Wednesday via a dollar bond issue despite the country’s ongoing political and economic turmoil.

Activists protesting a perceived slight against Islam recently blockaded a main road out of the Islamabad for nearly a month, bringing the capital almost to a halt. The army intervened to broker a truce and the deal was widely interpreted as a humiliation for the country’s civilian government, leaving the military in its strongest position for years.

But investors were undeterred by the political tension. Initial media reports suggested that the 10-year tranche would price just above 7 per cent but the issue closed at 6.875 per cent. The five-year paper – which is structured as a sukuk, or Islamic finance – priced at 5.625 per cent, also below initial guidance. Pakistan issued a sukuk last year, but has not raised conventional international debt since 2015.

Pakistan is rated B3 by Moody’s and B by S&P and Fitch.

Citi, Deutsche Bank, ICBC and Standard Chartered acted as bookrunners on the 10-year deal; Dubai Islamic Bank and Noor Bank joined them on the sukuk issuance.

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