Govt raises over Rs1tr in bond auction, launches 15-year zero coupon bond

June 18, 2025 (MLN): The Ministry of Finance has successfully raised over Rs1.2 trillion through a major auction of government bonds held today.

This includes the launch of a new 15-year zero-coupon bond, the first of its kind in Pakistan, which received strong demand from investors and raised over Rs47 billion.

This new bond does not pay interest every year. Instead, investors receive a lump sum at the end of 15 years.

This helps the government reduce short-term repayments and plan finances better. The strong response shows that investors are confident in Pakistan’s economy and reforms.

This move is part of the government’s broader strategy to reduce borrowing risks, extend the repayment period of debt, and promote Islamic and long-term financial products, as per the press release issued.

Yields on other government bonds also dropped, indicating optimism in financial markets about falling inflation and lower interest rates in the future.

Pakistan’s debt is now becoming more stable. The average repayment period of domestic debt has increased from 2.7 years last year to 3.75 years now, reducing the pressure to repay loans quickly.

Moreover, more pension funds and insurance companies, rather than just banks, are now investing in government bonds. This helps spread financial risk and deepen the local investor base.

Finance Minister Senator Muhammad Aurangzeb said, “This is a major step forward in making Pakistan’s financial system stronger and more resilient”.

“We are introducing new, smart ways of borrowing that reduce risk and give investors more options. Our aim is to manage public debt responsibly, promote Islamic finance, and attract more long-term investment to support the country’s economic growth”, Muhammad Aurangzeb added.

The Ministry of Finance is also working on more products to allow ordinary citizens to invest in government bonds, especially Islamic ones, to encourage savings and financial inclusion.

Despite global uncertainties, today’s auction shows that Pakistan’s economy is gaining investor trust and moving in the right direction.