ISLAMABAD - The Pakistan People’s Party (PP) on Thursday announced to submit a calling-attention notice to the Senate against the issuance of Sukuk and Eurobonds worth of $2.5 billion.

Pakistan on Wednesday successfully executed US$ 1.0 billion five years Sukuk and US$ 1.5 billion 10 years Eurobond transactions at a profit rate of 5.625 percent and 6.875 percent 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 Sukuk and Eurobonds

Senate Standing Committee on Finance Chairman Senator Saleem Mandviwalla of the PPP criticized the government for issuing bonds without taking approval from the Parliament. “I will submit a calling-attention notice in the Senate against the issuance of Sukuk and Eurobonds,” Mandviwalla said, who also remained former finance minister. 

He said that the government was continuously issuing Sukuk bonds after putting national assets as guarantees (mortgage). He claimed that the government had broken all the records of taking foreign loans of $40 billion during its current tenure. “Pakistan’s debt and liabilities had gone to $88 billion from only $48 billion when the Pakistan Muslim League-Nawaz took the charge in 2013,” he added. The issuance of Sukuk and Eurobonds will increase the country’s forex reserves without increasing overall public debt as there will be a corresponding reduction in domestic debt. Pakistan’s foreign exchange reserves of the State Bank of Pakistan (SBP) are $13.5 billion.

The process of the issuance of Sukuk and Eurobonds 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 road shows, 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 and the book-building process closed on November 29.

The orders were placed by numerous blue-chip institutional international investors from all across the globe. About 44 percent of the orders were placed by investors from Europe, 24 percent from Asia, 20 percent from North America, 8 percent the Middle East and 12 percent from other regions.

Pakistan had successfully tapped the international capital market four times since 2014 before the current auction. The government borrowed $2 billion in 2014 through capital market transactions. Pakistan floated Sukuk in September 2016 at the lowest interest rate of 5.5 percent but in September 2015, a five-year Eurobond at 8.25 percent was the most expensive deal.