Pakistan pays back more than $1 billion against five-year Eurobond

December 3, 2019 (MLN): Pakistan paid back more than $1 billion against five-year Eurobond on Monday. The international Sukuk matured in November 2019 which the PML-N government has obtained in November 2014 at a rate of 6.75%.

The official of SBP confirmed that State bank of Pakistan repaid the principal amount of $1 billion along with interest rate. That bond was issued to build up the forex reserves. However, with this repayment, it is expected that foreign reserves held by SBP will plunge below $7 billion.

To recall, the country’s foreign exchange reserves as of Nov 22 stood at $15.57 billion including $8.68 billion of State Bank and $6.89 billion of commercial banks.

Pakistan tapped into international bond markets, Eurobond, for increasing access to commercial debt financing. The lack of conditionality in its use and the drive to signal financial strength are the key features of Eurobond, therefore, at the time of induction of Eurobond, it raised bids valued at $2.3 billion, which was five times higher than the actual target set by the government.

Moreover, five-year shariah-compliant Sukuk Bonds will mature in 2021, launched in October 2016.

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