ISLAMABAD
Pakistan on Wednesday sold $2 billion worth of five and 10-year bonds in its first international sale since 2007, the Finance Ministry officials said.
The cash-strapped nation marketed $1 billion of five-year notes at a yield of 7.25 per cent and $1 billion of 10-year securities at 8.25 percent, said an official requesting not to be named as the figures would not be officially released until Thursday.
According to the Wall Street Journal, almost two-thirds of the bonds went to US-based money managers.
With the bond issuance, Pakistan joins a number of other countries raising cash from yield-hungry investors.
Earlier this week, Sri Lanka sold a bond for the second time this year, with Papua New Guinea, Bangladesh and Bhutan also expected to test the bond market later in 2014.
Demand for the bonds shows signs of improvement in Pakistan’s economy and the investors’ hunger for higher returns.
The Pakistani government is looking to chalk up GDP growth rate to four percent this year and hopes to further raise it to six percent in the near future.
DAR ECSTATIC:
Finance Minister Ishaq Dar, who is currently on a visit to Washington, said response to Pakistani sovereign paper was unprecedented.
“Multilateral donors and international markets have reposed tremendous confidence in Pakistan’s economic future,” he said during a discussion in the US capital.
The market rallied after the sale of the bonds on Wednesday, strengthening the Pakistani rupee. The sale will also boost reserves and help Pakistan meet International Monetary Fund (IMF) conditions.
Last September, the IMF saved Pakistan from possible default by agreeing to lend it $6.7 billion over three years.
The IMF gives each subsequent disbursement after confirming a country is on track with the conditions of the bailout. Pakistan must crack down on rampant tax evasion and broaden the tax base by eliminating tax exemptions and loopholes.
Pakistan has received three tranches that total about $1.6 billion from the lender. It has already had to get several waivers for failing to meet the conditions of the loan.