November 26, 2020 (MLN): Six global lenders have been qualified for technical bids for getting a contract to structure Pakistan’s upcoming Eurobonds that the government wants to issue to raise $1 billion in December or January.
According to The News, the government is expected to hire prospective advisers to float Eurobond and Sukuk bonds in the international market by this or early next week.
The ministry has received bids from the interested financial institutions and is now evaluating the technical and financial bids to structure the bonds.
“We will complete the process and select the advisers by the end of this or early next week,” Kamran Afzal, the ministry’s spokesperson told The News.
The government intends to raise around $1 billion through the issuance of Eurobonds possibly in December or January. “We can go up depending on the response from the international market,” he said.
Sources told The News that six global bidders have been qualified for technical offers. These include JP Morgan, Deutsche Bank, Dubai Islamic Bank, Citi Bank, Credit Suisse and Standard Chartered Bank. However, the list of the successful financial bidders has not been finalized by the finance ministry as yet.
Two consortiums will be hired to put in place structures for bonds, consisting of five financial institutions for Eurobonds and four for Sukuk. The selected consortium will assist the government in structuring bonds, while managing, coordinating and executing all the activities related to the issuance.
As per The News, the appointment of the two consortiums has to take place through an open competitive process.
The prospective Eurobond and Sukuk will be the first debt sale of the current government to raise funds to bridge the balance of payments gap for this fiscal year.
It is pertinent to mention that Pakistan had raised $1 billion in five-year Sukuk and $1.5 billion in 10-year Eurobonds in 2017. The profit rate for Sukuk was 5.625 percent and for the Eurobond, it was 6.875 percent.
The government intends to set up medium-term note programs for the issuance of dollar-denominated bonds in international capital markets. The program is initially intended to cover a period of one year.
Some countries are planning to return to the foreign debt market with dollar-linked bonds, despite the second wave of coronavirus epidemics, analysts said.
According to an analyst, if Pakistan resumes the International Monetary Fund program, which was suspended earlier this year, investors will be more interested in Pakistan bonds.
“Pakistan has a great track record in honoring Sukuk and Eurobonds of the past,” said Muzzammil Aslam, CEO at Tangent Capital Advisors to The News. “With the IMF program and better outlook, Pakistan will manage to pull investors' interest. Moreover, given the depressed global yields, investors’ appetite for Pakistan Sovereign issues will be unavoidable.”
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