Pakistan is likely to launch and finalise deals of Eurobond on February 12 to 15, after finishing road shows on February 11, said Finance Minister Shaukat Aziz while addressing a press briefing.
The two government teams set to hold road shows would meet in London on February 11 and would sign deals of the bonds between February 12 and 15, he said adding that the sentiments of the market are very encouraging for Pakistan and there are investors ready to buy these bonds. Bonds would be listed on Luxembourg where most of the bonds are listed and quoted.
A 100-page memorandum would also be issued elaborating the economic situation of the country. The bonds would have a positive impact on the investment especially on foreign direct investment.
He said that he has divided government team into two parts, one would be headed by Finance Minister Shaukat Aziz and the other by Governor State Bank Dr Ishrat Husain to hold consecutive road shows in six countries from February 8 to February 11 before issuing five-year $ 500 million Eurobond, sources told Business Recorder.
The "A" team headed by finance minister would start its road show from Singapore on February 09, 2004, the second in Hong Kong on February 10, 2004 and finally in London on February 11, 2004, which would also be joined by the other team the same day in London.
The "B" team to be headed by SBP governor is expected to hold its first road show in Dubai on February 08, 2004, the second in Bahrain on February 09, 2004 and the third in Frankfurt on February 10, 2004.
The "B" team would join the "A" team in London on February 11, 2004 on conclusion of road shows for the offering of $ 500 million sovereign bond that would mark Pakistan's re-enter into international capital market and help establish benchmarking.
It is to be mentioned here that the government of Pakistan on November 11, 2003 awarded the mandate for the issuance of Pakistan's sovereign bond to JP Morgan and Deutsche Bank as Lead Manager and ABN Amro Bank as Co-Lead Manager.
Pakistan is pinning its hopes on the improved rating of Pakistan's economic indicators, would fetch a wider distribution of its bond and tight pricing.
In 1999, Pakistan rescheduled $ 610 million bonds (the $300 million of bonds, along with two previous debt offerings worth $310 million) because of its low foreign exchange reserves sufficient only for a month of imports.
Currently, it has forex reserves worth $12.175 billion for the week ended January 10, 2004, or the equivalent of almost twelve months of imports.
Dollars received from the sale will be used to pay $ 1.07 billion loans that charge interest as high as 11-16%.
Pakistan would prepay total $ 4.5 billion during four years. Better diplomatic relations with India will help boost investor confidence toward Pakistan bonds. Pakistan first overseas debt sale since nuclear tests in 1998 sparked sanctions that crippled its finances.
Moody's Investors Service raised Pakistan's rating in October by one level to B2, still five levels notches below investment grade.
This promotion may reduce rate of returns on these bonds. The ratings company in December revised the outlook on Pakistan's B foreign currency rating to positive from stable, paving the way for a ratings upgrade.
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