Pakistan has sought to stabilize its external borrowing process by inviting bids from international financial institutions to form fixed underwriting teams for its Eurobonds, Sukuk, and Pakistani Rupee-denominated dollar-settled bonds. This initiative aims to address the country's substantial external financing requirements, estimated by the International Monetary Fund to be $19.398 billion in fiscal year 2025-26 and $19.123 billion in fiscal year 2026-27.
The government plans to appoint up to three consortiums to manage these capital market transactions for a three-year period. Consortium-1 will consist of up to five conventional international financial institutions to act as joint lead managers, underwriters, and bookrunners for Eurobond issuances, including specialized forms like ESG, green, gender, sustainable, and sustainability-linked bonds. Consortium-2 will also have up to five international financial institutions, notably including at least one Islamic financial institution, to handle international Sukuk issuances. Consortium-3 will involve up to three international financial institutions for PKR-denominated, USD-settled international bonds under the Global Medium-Term Note (GMTN) Programme.
These selected consortiums will be responsible for a comprehensive range of activities, including structuring, pricing, underwriting, syndicate management, investor outreach, roadshows, book-building, and allocation to ensure broad international distribution and high-quality order books. The government had previously raised $750 million through a Eurobond at an interest rate of 6.975 percent for three years, maturing in April 2029, just prior to this call for proposals. The timing and size of future issuances will be determined by prevailing market conditions and Pakistan's funding requirements, with selection criteria based on the lowest yield, lowest coupon, and overall lowest cost.
Bidders were required to submit separate technical and financial proposals for each financial instrument, with the deadline for submissions and bid openings set for May 25. The Ministry of Finance's adviser, Khurram Schehzad, highlighted that this plan establishes a structured approach for external funding in global capital markets over the next three years, allowing the government to tap the market as needed based on external financing requirements.
