Pakistan begins process to raise $2bn through Eurobonds

ISLAMABAD: Pakistan has started preparations to raise up to $2 billion through a new Eurobond, as improving credit ratings and stronger investor confidence open the way for the country to return more actively to international capital markets.

The proposed bond is expected to be issued in two tranches with maturities of five and 10 years, subject to prevailing conditions in global financial markets.

Finance Ministry Adviser Khurram Schehzad said the Ministry of Finance and Revenue had initiated the process for a US dollar-denominated benchmark dual-tranche Eurobond.

He said the transaction would depend on market conditions and follows successive upgrades to Pakistan’s sovereign credit rating, improved economic fundamentals and greater investor confidence.

Officials said the final size of the borrowing would be determined after assessing interest from international investors.

Pakistan’s federal budget for the 2026-27 fiscal year had already envisaged raising $2 billion through international bonds during the current financial year.

The government is expected to use the borrowing to strengthen its external financing position and support the management of existing financial obligations.

According to officials, the timing of the proposed transaction is considered important because of several recent developments that could improve investor sentiment towards Pakistan.

These include progress in regional defence cooperation under the Makkah Defence Agreement, a favourable development concerning the Indus Waters Treaty and recent upgrades to Pakistan’s sovereign credit ratings by international rating agencies.

The financial adviser appointed by Pakistan has completed preliminary preparations and recommended moving towards investor roadshows.

Officials said presentations could be held in major financial centres, including London, Washington and the Gulf region, to attract international investors.

The proposed Eurobond would be priced against the Secured Overnight Financing Rate (SOFR) along with a risk premium reflecting Pakistan’s credit standing and market conditions.

The government is also seeking to create greater flexibility in managing bilateral financing arrangements. Officials have indicated that medium- and long-term market borrowing could help Pakistan manage the repayment or return of deposits and loans provided by friendly countries.

Five international financial institutions — Citi, Deutsche Bank, Emirates NBD Capital, MUFG and Standard Chartered — have been appointed as joint lead managers and bookrunners for the transaction.

The planned issuance follows Pakistan’s return to international capital markets earlier this year after a four-year gap.

In April 2026, Pakistan raised $750 million through a three-year Eurobond, which was priced at a yield of 6.975%.

The latest planned transaction would represent a larger step into international debt markets and could provide a fresh test of international investor confidence in Pakistan’s economic outlook.