UNITED NATIONS

With its economy on the upswing, Pakistan on Friday issued a new 10-year bond of $500 million in the international Eurobond market that raised nearly $1 billion, Finance Minister Ishaq Dar said Saturday.
Speaking to reporters in New York, he said Pakistan went ahead with issuing the bond despite advice that the market situation was not in a favourable state, as some financially strong countries had postponed their bids. But Pakistan’s sound economy helped in evoking a good response from the market, even though there were some negative factors, Dar said.
The coupon rate was 8.25pc, equivalent to the rate at which it issued the same bonds in April last year.
Roadshows were conducted for launching the bond in London, Los Angeles and Boston by a team comprising Finance Secretary Waqar Masood Khan and Governor State Bank of Pakistan Ashraf Wathra.
Finance Minister Dar led the final roadshow at New York on Wednesday and the pricing of the bond was held on Thursday.
Pakistan came to the market on the back of a good track record of economic management since its last issue. The investors were appreciative of the progress made in stabilising the economy and reforms carried out in critical sectors of energy, privatisation, tax administration and investment climate.
Dar said the critical reforms carried out by Prime Minister Nawaz Sharif’s government had helped Pakistan’s get into a robust shape from a situation of default when the PPP government left the office.
APP adds: Despite tight and weak global market conditions and jittery investors’ sentiments, the issue was twice over subscribed, it added.
The economic downturn in China and uncertainty created by Fed decision has punctuated the weak market conditions, forcing cancellation of planned issues by several issuers having strong credit ratings.
Under the circumstances, the Finance Minister with the approval of the Prime Minister, decided that it would be prudent to restrict the issue to the intended and announced level of $500 million in order to cover the forthcoming maturity in March 2016 of a bond issued in 2006.

IMF likely to approve $502m tranche today

WASHINGTON (APP): The Executive Board of the International Monetary Fund (IMF) is due to meet on Monday to discuss the eighth review under the Extended Fund Facility arrangement with Pakistan and is expected to approve the release of $502 million loan tranche. Pakistan achieved the staff-level agreement with the IMF officials in August after the successful completion of the 8th review of the loan.
In a statement issued after the meeting, IMF officials had noted that Pakistan’s economy continues to improve, appreciating the commitment and progress in implementing the economic program to improve economic resilience, promote growth and private sector job creation in the country.
Speaking to reporters last week, IMF Director Communications, Gerry Rice, said that the executive board will meet on September 28 to discuss the eight review and after approval will release about $502 million to Pakistan.
Responding to a question on Pakistan’s decision to cut the interest rate recently, Rice said that that the easing of monetary policy in Pakistan has become possible in an environment of improving stability and low inflation.
“We do expect a moderate pick-up in inflation in the coming months as international energy prices stabilize. That said, real interest rates remain positive and we expect inflation expectations to remain well anchored,” he said.
The government of Prime Minister Nawaz Sharif has stabilized the country’s economy which was facing a serious crisis when he took over after winning elections in June, 2013. The improvement in the economy has boosted investors’ confidence.
This week Pakistan successfully issued a new bond of $500 million after a series of roadshows that were held in Los Angeles, Boston, New York, and one in England. Finance Minister Ishaq Dar was in New York to launch the bond.
Despite tight and weak global market conditions and jittery investors’ sentiments, the issue was twice over subscribed but the government decided to restrict the issue to the intended level of $500 million in order to cover the forthcoming maturity in March 2016 of a bond issue in 2006.
Moody’s Investors Services on September 18 had assigned a provisional rating of B3 to the government’s announcement of global bond offering, saying that the outlook is stable.
The IMF’s Board meeting comes as Prime Minister Nawaz Sharif is in New York to attend the UN General Assembly. Finance Minister Ishaq Dar and Prime Minister’s Special Adviser on Foreign Affairs and National Security Sartaj Aziz are accompanying the Prime Minister.
Speaking to media here, Prime Minister Nawaz Sharif ruled out devaluing rupee against the dollar.