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Bond Market News
Pakistan Upgraded to CCC+ by Fitch
July 30, 2024
Pakistan has been upgraded by a notch to CCC+ from CCC by Fitch. The upgrade reflects greater certainty over continued availability of external funding and comes after the IMF and the sovereign reached a staff level agreement on a 37-month $7bn Extended Fund Facility (EFF) programme. However, before IMF Board approval (assumed to be concluded by end-August), Pakistan will have to obtain new funding assurances from bilateral partners, chiefly Saudi Arabia, the UAE and China, totaling about $4-5bn over the duration of the EFF. According to Fitch, strong performance on the previous, more temporary IMF arrangement helped the country narrow fiscal deficits and rebuild foreign exchange reserves. Separately, Pakistan also cut its benchmark interest rate for a second consecutive meeting reducing the target policy rate by 100bp to 19.5%.
Pakistan’s dollar bonds traded stable with its 7.375% 2031 at 79.685, yielding 11.85%.
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