Pakistan has picked arrangers for a potential $2bn debt sale planned for later this year, according to two people familiar with the deal, in a bid to bolster falling reserves as the economy faces increased signs of stress ahead of elections next year.
South Asia’s second-largest economy is planning to offer Shariah-complaint and conventional bonds depending on market conditions, the people said, asking not to be identified because the information is private.
The sale would come as Pakistan’s finances are starting to show strain. The nation’s foreign-exchange reserves have fallen 15% to $19.8b this year as its traditional exports, such as textiles, dwindle and imports rise. The World Bank estimates that $17b of external financing is needed in the next financial year for Pakistan to bridge its rising debt payments and current account deficit, the lender said last month.
Pakistan is planning to raise $1b from a Sukuk offering, and has mandated Citigroup, Standard Chartered, Deutsche Bank, Dubai Islamic Bank and Noor Bank to manage the sale and has picked Citigroup, Standard Chartered, Deutsche Bank and Industrial & Commercial Bank of China for a potential conventional bond offering of an equal amount, the people said.
The country’s finance secretary, Shahid Mahmood, said in August that an assessment was being made to issue either sukuk or bond of about $1bn by the second quarter of this fiscal year starting in June. That comes as Pakistan’s current account deficit is expected to widen to 5.7% of gross domestic product, from a deficit of 4.4% in 2016, according to the International Monetary Fund.—Gulf Times