Pakistan auctions Sukuk, Eurobonds worth $2.5 billion
ISLAMABAD: Pakistan has successfully executed US $ 1.0 billion five years Sukuk and US $ 1.5 billion ten years Eurobond transactions at a profit rate of 5.625 per cent and 6.875 per cent respectively.
The order book for Pakistan’s sovereign papers was over US $8 billion, however, the Government decided to pick up only US $2.5 billion in order to ensure low final yields on the Sukuks and Eurobonds, says a statement issued here on Thursday.
This reflects the overwhelming confidence of global investors in Pakistan’s economy. It is worth mentioning that 6.875 per cent rate for 10 year Eurobond issuance is the lowest ever rate, as no 10 year bond has ever been sold at a cheaper rate by Pakistan in international capital markets.
Furthermore, Pakistan has never executed multiple tranche transactions worth US$ 2.5 billion, simultaneously.
The orders were placed by numerous blue chip institutional international investors from all across the globe. About 44 per cent of the orders were placed by investors from Europe, 24 per cent from Asia, 20 per cent from North America, 8 per cent Middle East and 12 per cent from other regions.
The process of issuance of Sukuk and Eurobond included roadshows in Dubai, London, Boston and New York by a team comprising Special Assistant to the Prime Minister on Economic Affairs, Miftah Ismail, Finance Secretary Shahid Mahmood, and Governor State Bank of Pakistan Tariq Bajwa.
The team held meetings with over 100 potential institutional investors in these major financial centres. The Pakistani delegation consistently remained in contact with the Prime Minister who also accorded the final approval for the transactions.
During the roadshows, the investors expressed keen interest in Pakistan and its economy, which is evident by a total book building of over US$ 8.3 billion.
They were particularly appreciative of the remarkable economic turnaround and high growth rate achieved as a result of economic reforms undertaken by the government. The roadshows ended on November 28, 2017 and bookbuilding process closed on November 29, the statement added.
It is important to note that the “Subscription Agreement” with Joint Lead Managers provides that the certificates or interests therein will not be offered, sold or transferred directly or indirectly in Pakistan, to residents of Pakistan, or to, or for the account or benefit of, such persons. The issuance of Sukuk and Euro Bond will increase the country’s forex reserves without increasing overall public debt as there will be a corresponding reduction in domestic debt.
Such over subscription and overwhelming response of global investors to the said sovereign issuance is an evidence of the trust and confidence of international capital markets in the economic policies of the Government and the impressive economic turnaround story of Pakistan.