Funds tread back to local bonds as economy stabilizes

October 15, 2024 (MLN): Pakistan’s local debt is set for its first annual inflow in five years, buoyed by high yields and a stable currency in an improving macroeconomic environment, Bloomberg reported.

Net overseas inflows into treasury bills rose to $875 million in 2024, according to State Bank of Pakistan’s latest data from Monday. That’s a turnaround from four straight years of outflows totaling $1.4 billion.

Pakistan’s success in stabilizing its cash-strapped economy is bearing fruit, with investors more confident on its ability to pay debt, thanks largely to the International Monetary Fund’s support. The nation’s treasury bills yield about 16% to 17%, among the highest in Asia.

Read: T-bills continue to attract foreign capital

“Investors see a stable currency and high rates that is attracting them to Pakistan,” said Suleman Rafiq Maniya, an independent wealth manager in Karachi.

In a sign of the nation’s growing appeal, JPMorgan Chase & Co. led a group of foreign investors in a visit to the country last month. Finance Minister Muhammad Aurangzeb discussed fixed-income investment opportunities with the group, assuring them of the government’s support in facilitating their investment.

The nation’s foreign reserves have increased to the highest in more than two years after an approval by the IMF for a new $7 billion loan package last month.

Pakistan’s other assets have performed as well. The benchmark stock index has increased 73% in the past 12 months, making it the world’s best performer. Dollar bonds have delivered returns of nearly 40% this year, according to data compiled by Bloomberg.

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