By Mashood Siddiqi
ISLAMABAD, Sept 3 — Pakistan has raised a record $3 billion through a dual-tranche Eurobond sale that attracted nearly $6 billion in orders, completing the largest single international capital-market transaction in the country’s history as Islamabad seeks to broaden its sources of foreign financing.
The transaction comprised $1.75 billion of 5½-year bonds carrying a 7.50% coupon and $1.25 billion of 10-year bonds at 7.90%, according to the Ministry of Finance. The order book was almost twice the amount ultimately issued and included institutional investors from major international markets.
The scale of demand, particularly for the 10-year tranche, is significant for Pakistan after years in which its access to international bond markets was constrained and the country relied heavily on multilateral, bilateral and commercial financing to meet external requirements. Finance Minister Muhammad Aurangzeb said investors participating in the latest transaction came from Asia, the Middle East, Europe and the United States.
The Finance Ministry described the transaction as evidence of renewed investor confidence and said international investors were reassessing Pakistan’s macroeconomic and sovereign credit outlook. Those assessments remain government claims, but the nearly $6 billion order book provides a measurable indication of demand for the latest Pakistani sovereign offering.
The deal also pushes Pakistan further along the maturity curve. Of the $3 billion raised, $1.25 billion was committed for 10 years, giving Islamabad access to substantially longer-term international financing than its previous Eurobond transaction in April, when it initially sought $500 million and eventually raised $750 million through a three-year issue after exercising a $250 million greenshoe option.
Pakistan also repaid a $1.4 billion Eurobond that matured in April. The combination of that repayment and the new issuance has helped the government re-establish pricing benchmarks in international debt markets after several years of limited market access.
The latest transaction is the first issuance under Pakistan’s renewed Global Medium-Term Note programme and follows the country’s inaugural Panda Bond. The government says the programme is designed to diversify financing sources, extend debt maturities and reduce refinancing and rollover risks rather than simply increase borrowing.
Aurangzeb said the government plans to use a broader range of instruments, including Sukuk, Panda Bonds and rupee-denominated, dollar-settled bonds, as part of its medium-term financing strategy. He said the objective was to replace expensive short-term debt where possible with longer-duration financing and reduce the frequency with which Pakistan must refinance maturing obligations.
The record issuance nevertheless comes with a cost. Pakistan will pay coupons of 7.50% and 7.90% on the two tranches, meaning renewed access to international capital does not amount to cheap financing. The longer-term test will be whether Islamabad can use that access to improve its debt maturity profile while continuing fiscal and structural reforms rather than allowing new borrowing to add to future refinancing pressure.
The immediate result is clear: Pakistan sought international capital at unprecedented scale, successfully placed $3 billion of sovereign bonds and received investor orders approaching $6 billion. For a country that had spent years with constrained access to international bond markets, the transaction represents a significant return to global debt financing — even as the cost and eventual use of that borrowing remain central to judging its longer-term economic impact.