Government all set to finalize Eurobond and Sukuk Bond issue

According to sources, Government is expected to finalize two consortiums to float Eurobond and Sukuk Bonds. The bids were opened on Tuesday last week, as Pakistan seeks to raise $ 2 billion in an effort to strengthen the balance of payments position. The combined size of the two issues could reach up to $ 2 billion or $ 3 billion depending on the interest it invokes from international investors.

Eurobond consortium is expected to consist of four international commercial banks, the composition of consortium for Eurobond is as follows: CITI, Standard Chartered. Deutsche Bank and ICBC Bank. The government via its Eurobond issue seeks to raise up to $ 1 billion.

However, the Sukuk Bond consortium, according to unofficial sources, comprises of 6 international banks, which include: CITI, Standard Chartered, Deutsche Bank, ICBC, Dubai Islamic Bank and Noor Bank JSPC. The government under this issue expects to raise around $ 1 billion as well.

According to the sources, the Government has decided to keep M3 Motorway (Pindi Bhattian – Faisalabad) as the collateral for the said Sukuk Issue.

The response to the issue is dependent upon how investors view Pakistan’s stability and growth trajectory in the future. However, Pakistan is expected to achieve its target of $ 2 billion as only recently Pakistan raised $ 1 billion in last such issue of Eurobonds in September, 2015.

According to sources, Government has set a tentative date of November 15th to finalize the deals as the Current Account situation continues to become unmanageable. During July – Sep, 2017 Pakistan’s CAD reached $ 3.6 billion, a 117% increase from same period last year.

As soon as the government finalizes the consortiums for the respective issues, the road show will kick off in November to increase interest in the bonds.

The Ministry of Finance is yet to announce the final consortiums, however according to preliminary reports the abovementioned two consortium are expectedly the most likely recipients for the two issues.