Govt raises $ 2.5 bn by selling Sukuk, Eurobond

November 30, 2017
Published in Economy

KARACHI: Pakistan has raised $2.5 billion from foreign capital markets by issuing the five-year Sukuk (Islamic bond) and the 10-year Eurobond in New York.

Officials say the government has managed to attract highest-ever bids in the auction of Pakistani debt in its first venture into foreign capital markets.

Bids worth over $8 billion were received for the two bonds that the government floated in New York on Wednesday: a five-year sukuk and a 10-year eurobond. The government raised $1bn through the sukuk at 5.625 per cent and $1.5bn via the euro bond at 6.875pc.

Besides the high participation, yields were also lower compared to Pakistan’s last foray into international bond markets.

Last year, for instance, the government raised $1bn through a five-year sukuk at 410 basis points above the five-year US treasury bill, whereas that spread was 365bps this time around. Likewise, the yield on the 10-year bond was down by 1.6pc from the last 10-year paper floated by Pakistan in international markets.

Book-building began at 6pc. Citibank, Deutsche Bank, Dubai Islamic Bank, ICBC, Noor Bank and Standard Chartered Bank opened the books.

The government delegation overseeing the conduct of the auction was led by Special Assistant to the Prime Minister on Economic Affairs Miftah Ismail, State Bank of Pakistan Governor Tariq Bajwa and Finance Secretary Shahid Mehmood.

The markets appeared to have shrugged off the turbulence in the country as the single largest auction of government debt came to a close late on Wednesday night, Pakistan time.

Pakistan’s reserves depleted by over $4bn in one year to $19.8bn due to the widening of the current account deficit, which surged 122pc to $5.013bn in the first four months of 2017-18 compared to $2.259bn a year ago. The government has received sustained criticism for taking on excessive amounts of debt to compensate for this trend.


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Story first published: 30th November 2017

 
 

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