Pakistan plans rupee-denominated, dollar-settled bond, says Aurangzeb

Finance Minister Muhammad Aurangzeb announced plans for Pakistan to issue a rupee-denominated, dollar-settled bond, as part of efforts to diversify the country's borrowing sources and lessen dependence on the domestic banking system. The government successfully raised $3 billion through a dual-tranche Eurobond sale previously. Aurangzeb stated that specific details about the proposed instrument, such as its size, maturity, and issuance timeline, have not been disclosed.

The announcement follows Pakistan's recent $1.75 billion and $1.25 billion bond issuances at coupon rates of 7.5% and 7.9%, respectively. In his address at the Asian Development Bank's "Mobilising Private Capital: National Strategic Dialogue on PPPs and Privatisation," Aurangzeb emphasized the need to deepen Pakistan's capital markets and attract institutional investors beyond the banking system, including insurance companies and non-banking financial institutions.

The government is also exploring tokenization of existing Eurobond debt, inspired by Hong Kong's experience. Aurangzeb highlighted recent efforts to expand access to government securities for retail investors, including a partnership with JazzCash and the State Bank of Pakistan's application for direct investment in government securities.

The foreign exchange reserves, as of June 30, stood at $18.4 billion, with a target of $21 billion by the end of the current fiscal year.