Pakistan Targets B+ Credit Rating by Next Fiscal Year, Aurangzeb Says as $3 Billion Eurobond Draws Twice the Bids

ISLAMABAD: Federal Finance Minister Senator Muhammad Aurangzeb has said Pakistan is aiming to lift its sovereign credit rating to B+ by the start of the next fiscal year, with a double-B rating as the longer-term goal. He was speaking to Bloomberg TV on the sidelines of the International Monetary Fund and World Bank annual meetings in Bangkok.

Return to global markets

The minister said Pakistan has returned to international capital markets after a gap of about four years. After a $750 million private bond placement in April, the country issued $3 billion in Eurobonds about three weeks ago, drawing bids of roughly twice the amount offered from investors in Asia, the Middle East, Europe and the United States. Under a $1 billion panda bond programme, $250 million has already been issued with more planned, while banks have been mandated for Islamic sukuk and, for the first time, dollar-settled bonds denominated in rupees, and tokenising existing Eurobonds is also under consideration.

Longer debt maturities

Aurangzeb said the government is in no rush to borrow globally again this fiscal year. Over the next two to three years, the plan is to replace part of the short-term external debt with longer-term borrowing, reducing refinancing pressure and rollover risk without increasing the overall stock of external debt. Pakistan’s rating has been upgraded three times since April last year and now sits in the B category.

Growth and reserves

The finance minister said the economy is expected to grow by more than 4 percent this fiscal year despite the Middle East conflict and elevated oil prices, compared with 3.7 percent last year. He also pointed to foreign exchange reserves of around $21.4 billion, equivalent to about three months of import cover.