Prices of Pakistan’s dollar bonds soar to four-year high

Pakistan International Bond prices continued to trade upward and have reached a four-year high, reported 24NewsHD TV channel on Monday.

A report of Topline Securities said that yields have come down and are below 8.0 per cent, a level seen earlier in January 2022. 

Significant rally in bond prices is attributed to substantial improvement in economic indicators and recent rating upgrade by three international rating agencies, S&P, Moody’s and Fitch.

Data compiled by a brokerage firm shows that Pakistan’s Eurobonds, worth $1 billion and maturing in April 2031, are priced at 97.3 cents, resulting in a yield of 7.9 per cent.

Saad Hanif Head of research at Ismail Iqbal Securities, said that Pakistan’s Eurobond rally is driven less by the headline rating upgrades and more by the underlying shift in risk perception.

Together these factors compress credit spreads and push yields below 8.0 per cent, making the ratings improvement a catalyst but not the sole reason for the four-year high in prices, he noted.

Pakistan’s economy has shown recovery after facing unprecedented challenges. The country’s foreign exchange reserves have nearly tripled, rising from $4.4 billion at the end of FY23 to $14.5 billion by the end of FY25. 

This is attributed to an improved current account, increased dollar buying by the State Bank of Pakistan, and a surge in remittances.

Reporter: Ashraf Khan