The Pakistani Eurobond set to mature in April 2024 has been on an impressive upswing, with a 10% increase in the past few days. This positive trend has been attributed to the International Monetary Fund’s (IMF) support and a timely 6-monthly coupon payment on the bond. CEO of Topline Securities, Mohammed Sohail, highlights the bond’s remarkable rally, noting a 130% increase in its price over the past year, from 38 cents to 89 cents.
Pakistan has experienced significant economic fluctuations, from a substantial currency devaluation earlier in the year to a remarkable rebound after implementing emergency spending cuts and stringent energy sector policies. Despite these challenges, Pakistan seems to have avoided default on its debt repayments, at least on paper.
Expectations are high for additional IMF disbursements, with talks of key targets being met to tap into the remaining IMF bailout. Pakistan has notably fulfilled many of the IMF’s fiscal and monetary targets, such as reducing the budget deficit, increasing taxes, tightening monetary policy, boosting foreign exchange reserves, and raising energy rates.
With the IMF’s upcoming economic review and the potential for further disbursements under the ongoing stand-by arrangement (SBA), public sentiment is optimistic about Pakistan’s dollar bonds surging to higher levels from mid-November onward. The nation’s ability to meet IMF targets and gain IMF support has instilled confidence among investors, suggesting a positive outlook for Pakistan’s financial markets.