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Pakistan’s dollar bonds have rallied by roughly 1-2% after its finance minister announced that China has rolled over a $2.4bn loan made to the country for two years, of which over $600mn was expected to mature this fiscal year. The waiver for the loan made by Chinese Exim bank only applies to the principal amount, meaning that Pakistan will still make interest payments over the two-year period. This arrangement will ease pressures on the country’s meagre foreign reserves, with an IMF deal made earlier this month helping it to avert a possible default. China has in recent months rolled over or granted new loans of around $5bn to Pakistan, with a Chinese Foreign Ministry spokesperson saying that it will “continue to advance cooperation” with Pakistan to “support the country in achieving stability and development”.
Pakistan’s 7.375% 2031s rose 2.4% and are currently trading at 48 cents on the dollar.