Bloomberg says Pakistan's Asia-beating bond rally seen extending

Pakistan’s dollar bonds are likely to extend their Asia-leading rally as government’s plan to re-enter global debt markets lift investor sentiment, according to Bloomberg report. 

Pakistan government is aimed at issuing yuan-denominated bonds later this year and to return to the Eurobond market in 2026 for the first time in nearly five years, a key milestone for a country that came close to default two years ago. 

The move could spur further gains in debt, according to Goldman Sachs Asset Management and UBS Asset Management. 

These planned issuances highlight Pakistan’s effort to diversify its funding sources and curb reliance on the International Monetary Fund. So far this year, its dollar bonds have delivered a 24.5% return, the highest in Asia.

Danske Bank Asset Management, which bought Pakistan’s dollar bonds at the peak of its financial crisis two years ago, has increased its holdings several times this year, said Soren Morch, head of emerging markets debt. “We are optimistic that Pakistan will stay on the reform course, rebuilding buffers like higher dollar reserves and also getting market access and taking advantage of that,” he told Bloomberg.

S&P Global Ratings and Fitch Ratings have both upgraded Pakistan’s sovereign rating this year, pointing to better fiscal management and reform momentum under Prime Minister Shehbaz Sharif’s International Monetary Fund(IMF) backed programmes.