Pakistan tops up March bonds to the tune of $1bn

DUBAI: Pakistan sold $1 billion on Tuesday in a reopening of an existing three-tranche bonds launched in March, a deal that raised $2.5 billion and was its first international bond sale since late 2017.

Pakistan sold $300 million of a tranche due in 2026 at 5.875%; $400 million in bonds maturing in 2031 at 7.125%; and $300 million in paper due in 2051 at 8.45%, according to a document from one of the banks on the deal seen by Reuters.

The bonds were tightened from initial price guidance of 6%-6.125% for the notes due in 2026, around 7.375% for the tranche maturing in 2031 and around 8.75% for the paper due in 2051, after they drew more than $3 billion in combined orders.

The March transaction had attracted $5.3 billion in orders and was 2.1 times oversubscribed.

Pakistan was able to cut its cost of funding by 12.5 basis points (bps), 25 bps and 30 bps for each respective tranche of the "tap" - when an existing transaction is reopened for subscription, using the same documentation as before.

The March transaction's five-year tranche launched at 6%, the 10-year paper at 7.375% and the 30-year notes at 8.875%.

Pakistan, which has Fitch and S&P ratings of B-(minus) and a Moody's rating of B3 - all considered "junk", has set a 4.8% GDP growth target for the year that began on July 1, after growth of 3.96% in the 2020/21 financial year.

The International Monetary Fund, which is holding discussions with Pakistan on a 39-month $6 billion financing programme that began in 2019, estimates GDP growth for 2020/21 at 1.5%, while the World Bank projects 1.3%.

Pakistan has set a fiscal deficit target of 6.3% for the 2020/21 fiscal year, lower than the 7.1% expected in the outgoing year.

Credit Suisse, Deutsche Bank, Emirates NBD Capital, JPMorgan and Standard Chartered arranged the tap.