Pakistan international bond yields surge to 50.6%

July 19, 2022 (MLN): The interest rates for Eurobond maturing on April 15, 2024, for tenor 10 years recorded an increase of 16% to 50.6% owing to the rising concerns over the deterioration in the country's external liquidity position and financing conditions since early 2022.

Meanwhile, the interest rate on 10 years Eurobonds maturing on September 30, 2025, climbed by 9% to 35.6%.

The dismal outlook of Pakistan's economy portrayed by the renowned rating agencies on the back of rising political and economic uncertainties is the main reason behind the spike in Eurobond yields.

"Fitch has revised Pakistan's outlook to negative which is one of the reasons for a sharp increase in Eurobond yields", Arsalan Siddiqui, Head of Research at Optimus Capital told Mettis. 

The country is going through a very uncertain political situation that can certainly delay the required economic recovery. External financing is the major concern that Pakistan may continue facing in the prevailing political and economic situation, he added. 

Speaking to Mettis Global, Ahsan Mehanti, Director of Arif Habib Group said, "Fitch Ratings and Moody's concerns over Pakistan's ability to complete the IMF program triggers yields implications."

The continued slump in PKR and increasing uncertainty could further mess up the ratings, he warned. 

"These are default level yields, indicating that investors' confidence is low even after IMF's staff level agreement," Fahad Rauf, Head of Research at Ismail Iqbal Securities told Mettis Global. 

Some of it might be due to the recent political uncertainty created after bye-elections, he noted.

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