Pakistan re-enters Eurobond Market

[Durrani Abid]

Pakistan successfully raised $2 billion from global capital markets through the issue of five- and 10-year Eurobonds.

Q1: Is it a right decision to re-enter Eurobond Market? If yes the then why the
the same Finance Minister-Mr.Dar discontinued this practice in 2007?

Q2: Have we offered the right yield?

Q3: As a result of $ inflow,PKR appreciates. Wouldn't it cause a pressure on our exports that may lead to the distrubance of our BOT?

Please discuss with concrete arguments.

[Zeeshan Rajput]

Originally Posted by Durrani Abid

Pakistan successfully raised $2 billion from global capital markets through the issue of five- and 10-year Eurobonds.

Q1: Is it a right decision to re-enter Eurobond Market? If yes the then why the
the same Finance Minister-Mr.Dar discontinued this practice in 2007?

Q2: Have we offered the right yield?

Q3: As a result of $ inflow,PKR appreciates. Wouldn't it cause a pressure on our exports that may lead to the distrubance of our BOT?

Please discuss with concrete arguments.

Q.1 Yaah it is right decision to re-enter into the euro bond market because euro bonds are the only way to bring investors in Pakistan in prevailing conditions of the country . in 2008 the govt was of PPP and the country was facing hardships so firstly no one was ready to buy our bonds at that time and second it was not sure that govt would be able to pay interest in future and govt could use wrongly that money so i think no investor could trust on that govt but now Daar has proved that he can improve the economic conditions and GOVT is sincere and showing measures for the improvement of economy this is the reason of remarkable response of bonds in international market .

Q.2 When we talk about yield so i think it is the requirement as there are so many other bonds in market so why investor will buy our bond so i think this was necessary and i do not think that yield is so much high 100 per 7 rupey tu we are giving in our country as well so its not a big deal .

Q.3 Appreciation of pkr does not affect the export first of all we do not have much more to export we have just textile and some other food items and some other etc as well, all those depend upon the demand in world and quality, and exports are done with some agreements, and Yaah when our rupee will appreciate so directly our production cost will decrease and ultimately our product or export material will be of inexpensive cost .

hope got the answers

[Durrani Abid]

Originally Posted by Zeeshan Rajput

Q.2 When we talk about yield so i think it is the requirement as there are so many other bonds in market so why investor will buy our bond so i think this was necessary and i do not think that yield is so much high 100 per 7 rupey tu we are giving in our country as well so its not a big deal .

$1 billion through five-year bonds at a fixed rate of 7.25%, which is as many as 558 basis points above the benchmark five-year US Treasury rate. The rest of the $1 billion was generated through 10-year bonds at a fixed rate of 8.25%, which is 556 basis points above the corresponding 10-year US Treasury benchmark rate.

558 and 556 basis point difference means 5.58% and 5.56 % difference respectively.Is it not a huge difference in the yeild.

Though higher-than-benchmark rate is attributed to the ‘premium’ that Pakistan must pay on its sovereign bonds in order to generate investor interest, as investment in Pakistani bonds is riskier than that in the US treasury instruments.Nevertheless the difference is too high to justify.

Take the case of Greece, when it went bankrupt of 100 billion USD, it entered into Eurobonds and earned millions of USD just at the yield rate less than 5%.

So are we in worse condition than Greece ? No certainly not. Then why we have set such big yield?

[Zeeshan Rajput]

Originally Posted by Durrani Abid

$1 billion through five-year bonds at a fixed rate of 7.25%, which is as many as 558 basis points above the benchmark five-year US Treasury rate. The rest of the $1 billion was generated through 10-year bonds at a fixed rate of 8.25%, which is 556 basis points above the corresponding 10-year US Treasury benchmark rate.

558 and 556 basis point difference means 5.58% and 5.56 % difference respectively.Is it not a huge difference in the yeild.

Though higher-than-benchmark rate is attributed to the ‘premium’ that Pakistan must pay on its sovereign bonds in order to generate investor interest, as investment in Pakistani bonds is riskier than that in the US treasury instruments.Nevertheless the difference is too high to justify.

Take the case of Greece, when it went bankrupt of 100 billion USD, it entered into Eurobonds and earned millions of USD just at the yield rate less than 5%.

So are we in worse condition than Greece ? No certainly not. Then why we have set such big yield?

Sorry dear but you have confined me into a dilemma i mean i am not comprehending that i should laugh or weep dear friend you are comparing a European country with Pakistan do you know about their currency rate compare to US dollar , and this is Pakistan where terrorism is active,target killing is active,anarchy is full , leadership has flaws so how can you compare both these countries, for bringing customers you will have to offer a stunning rate its your need . investor do not eat grass he know very where he should invest, he will never invest his money for 3 or 4 % interest in a country where he is not conform to get benefit even his money back so it is a risk played by all investors in the greed of this huge interest rate and our govt as well now if govt take full advantage of this money so she would not only be able to pay interest but can also get premium for it self dude. so it was necessary to give him such offer that he would not be able to deny for our bonds . and for talking loan from IMF, GOVT is collecting some 9 billion dollars which she will have to show to IMF in next 3 month so could you be able to get such huge amount in 3 months by just 3,4and 5% interest rate . hope understood.

[Durrani Abid]

@
Zeeshan Rajput

Dear I talked about Greece in nexus to its bankruptcy.
Do you know what does it mean when a country is declared bankrupt.
International investors lost hopes for Greek investment.
I ment, despite such turmoil Greek offered very low yield on its Eurobonds.

Read this article from The Economist.
http://www.economist.com/news/financ...o-prodigal-son

FYI
Even Srilanka is offering lower rate of interest on their Eurobond.

Dear I posted the thread for discussion.
Here is nothing to weep or laugh.Such immature sentences do you no favour.
I invited the cooments for healthy discussion so had better not comment stirically. Read between the lines, and try to understand the things and the context in which they are discussed.