Favourable credit rating

It is indeed reassuring to note that the international rating agencies have assigned favourable ratings to Pakistan's sovereign bond issue of $500 million.
The marketing or road show for its launching was initiated by the Finance Minister, Shaukat Aziz, who visited Singapore for this purpose last Friday, February 6.
He will also visit Hong Kong and England, while another team led by Dr Ishrat Husain, Governor of the State Bank of Pakistan, will be visiting Bahrain, Abu Dhabi and Frankfurt shortly with a view to briefing the international capital markets on Pakistan's healthy economic recovery and highly improved foreign debt servicing performance.
The Standard and Poor's Ratings Services assigned 'B' rating on a long-term basis to the Pakistan's Euro-Bonds while Moody's Investors Service has announced 'B2' rating to these bonds which is in conformity with the country's external credit worthiness as upgraded by this agency back in October 2003.
These ratings obviously provide implicit support to Pakistan's impending Euro-Bonds issue which in turn is likely to reinforce the marketing efforts of the two teams assigned to conduct road shows in the important capital markets in South East Asia and Europe, including the UK.
It is common knowledge that foreign investors having plans to make long-term investment in different countries, specially in the developing world, always depend heavily on the credit ratings of international rating agencies in respect of the overall investment climate and credit worthiness of different economies during a given period.
Pakistan's entry into the international capital market after a gap of several years through the issue of the sovereign bonds at a fixed rate of return with maturity over a period of 5 years, is also reflective of a strategy to bring the country into limelight in the foreign capital markets.
The idea of bond issue therefore has two objectives, in the first place, to raise borrowed funds at a relatively lower rate of interest when the interest rates almost all-over the world are at historic lows, secondly, the road shows issues would also simultaneously provide an opportunity to bring into focus the achievements on the economic front that Pakistan has accomplished through its meaningful macro-economic reforms.
The prospective foreign investors who would be invited at the road shows, will thus be able to make their own assessment in the light of the facts and data highlighting the turnaround in Pakistan's economic performance in the last four years.
The occasion will be suitable for inviting foreign investors to participate in Pakistan's economic development in the wide-ranging profitable opportunities in various sectors of the economy.
It may be mentioned here that thanks to the current turnaround in Pakistan's economy, prominent international investors in the field of telecommunication, including Sing Tel of Singapore, have reportedly evinced keen interest in the privatisation of PTCL.
The government has been making efforts over the last several years to sell strategic stake in PTCL to a prominent telecommunication company of the world repute.
However, the response to this programme from international buyers has been found to be a discouraging one so far.
This was due partly to the uncertainties in Pakistan's economic performance and instability on the political front and partly to lack of stable conditions in the international telecommunication business.
Now since Pakistan's international credit rating has gained higher ceilings, not only the process of privatisation is likely to pick up tempo in the coming months but also fresh investment interest from multinational companies is expected to show up prominently.
One of the recent instances of successful privatisation is the take-over of one of the leading public sector banks viz. Habib Bank Limited by the Aga Khan Fund for Economic Development at a much better price per share than what could be expected a year ago.