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Pakistan’s Dollar Denominated Bonds Are Under Selling Pressure

Pakistan’s dollar-denominated bonds came under selling pressure because of the political disorder unfolding in neighboring Afghanistan, reported Dawn News.

A Bloomberg Barclays index showed that Pakistan’s bonds were the worst performers among the emerging-market peers.

The prices of five-year maturity papers dropped by 1.4 percent, and those of ten-year maturity papers and thirty-year maturity papers decreased by 1.7 percent and 1.8 percent respectively.

Pakistan had sold these three denominations notes in April to raise $2.5 billion in debt from the international market, after which another $1 billion was raised through a tap issue in July. The prices of Pakistan’s papers rose soon after the issue of the debt to peak in mid-June.

The news report quoted industry sources as saying that the drop is the result of investors seemingly bracing themselves for a potential fallout of Afghanistan with Pakistan.

The head of a Dubai-based fixed-income asset management company was quoted in a Bloomberg report as saying that “Investors are concerned over any spillover impact on law and order in Pakistan and ‘whether global forces try to isolate Pakistan’ for perceived support of the Taliban”.

Pakistan’s bond prices have been under pressure for a while now but had previously been attributed to the potential tightening of the monetary policy and the rising inflation in the country instead of the situation in Afghanistan.

Pakistan’s $8.8 billion dollar bonds have contracted by nearly four percent since mid-June, as reported by Financial Times.


Source: Pro Pakistani

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