Barclays upgrades Pakistan sovereign bonds ratings after IMF nod

July 03, 2023 (MLN): Barclays has upgraded its rating on Pakistan’s sovereign bonds from ‘underweight’ to ‘market weight’ following the International Monetary Fund’s (IMF) initial nod for $3 billion funding, as Bloomberg reported.

The bailout would ease payment pressures and allow for multilateral and bilateral financing for the South Asian nation, Avanti Save, a credit analyst at Barclays in Singapore, wrote in a note.

Pakistan’s bonds maturing 2025, 2026, 2027, and 2031 are recommended as “recent developments with the IMF have exceeded our expectations,” Save wrote.

Barclays’ recommendation comes as the notes trade at prices lower other emerging market peers that haven’t defaulted.

The IMF financing arrangement allows Pakistan breathing room during its upcoming general election while lowering the risk of a payment halt.

IMF’s $3bn 9-month stand-by-agreement (SBA) will give breathing room to a new government to construct its economic policies and lower the chance of a default.

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