Pakistan government launches dollar bond
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Pakistan has kicked off a dollar bond offering that will be a key test of investor sentiment after the resumption of a $6 billion bailout program with the International Monetary Fund (IMF), Bloomberg reported.
According to the news report, Pakistan will be marketing the notes in three parts, with the initial price guidance on the longest 30-year tenor in the 8.875 percent to 9 percent range.
The decision to issue these bonds has come at a time of flurry in the economic and political landscape of Pakistan. While on one hand, Pakistan’s economy, as well as the stock exchange, is struggling with the spike in coronavirus cases once again, on the other hand, the country’s finance minister has been sent packing with the Minister for industries as his replacement.
Hammad Azhar will replace Hafeez Shaikh as Pakistan’s third finance minister in less than three years. ------------------------------
Last week, the IMF announced its decision to release about $500 million to Pakistan after the completion of certain reviews of a $6 billion bailout program. Around the same time, the ministry of finance had also announced the government’s plans to issue international Sukuk after the Eurobond issuance.
Pakistan is expecting to raise north of $1.5 billion in global bonds if market conditions remained conducive, Muhammad Umar Zahid, director of debt at the ministry, said last month.
The FBR has exempted income tax on the profit on debt of an agency of a foreign government, a foreign national company, firm or association of persons or any other non-resident person, on Eurobonds and international Sukuk issued under the government’s medium-term note program.
Under FBR’s notification, in the exercise of the powers conferred by clause (75) of Part I of the Second Schedule link to the Income Tax Ordinance, 2001, the federal government has approved exemption for the purposes of the said clause to the profit on debt income of an agency of a foreign government, a foreign national company, firm or association of persons or any other non-resident person, on Eurobonds issued under the government’s medium-term note program.
