Turkey enters global bond market. Should Pakistan?

February 13, 2024 (MLN): Turkey issued global eurobonds worth $3 billion with 10-year maturity at a 7.875% coupon. In November last year, Turkey issued Sukuk worth $2.5bn with a 5-year maturity at 8.4%. This is despite going through a near hyperinflationary, currency rout and a 45% interest rate. 

Similarly, Ivory Coast issued bonds worth $2.6bn (oversubscribed 2x) for 9 and 13 years maturity at yields of 7.875% and 8.5% respectively. Sustainability bonds naturally fetch better yields due to higher interest from investors.

This is Ivory Coast's first bond issuance after 7 years with nominal spreads over US treasury bills. 

Meanwhile, Kenya is planning to buy back some of its 2bn 2024 maturity bond although it's a liability management exercise not advocated by many. Nevertheless, there is an opportunity to save taxpayers' money. 

Pakistan too had planned to tap global capital markets this year while making projections. However, high bond yields rendered the plan unviable.

As a strong advocate for buyback, I kept insisting on going to the market by raising USD at 10-11% from overseas Pakistanis to buyback bonds trading near 25-27% yields. Oh well, the decision-making in Pakistan is slow at best. 

With current bond yields at 12-14% per annum, it is not feasible to tap the markets today.

Once a newly elected government forms its economic team that successfully clinches a debt-reducing IMF program for structural reforms, immediately Pakistan should tap the global market by year-end with green, sustainable and/or sukuk for 5, 10 or preferably 30 years of maturity. Single digits will be a success. Spend USD wisely. 

The author is an independent economic analyst and writes on Twitter and Linkedin.