Moody's upgrades Pakistan’s bond rating

By AFP
Published: March 25, 2015
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PHOTO: AFP

PHOTO: AFP

KARACHI: Moody’s upgraded Pakistan’s dollar bonds rating one notch from stable to positive on Wednesday on the back of the country’s improving macroeconomic indicators.

The financial ratings firm said its decision came in view of Pakistan’s strengthening foreign exchange reserves.

Read: Petrol crisis weighing on credit worthiness: Moody’s

Pakistan has been trying to boost its flagging economy since Prime Minister Nawaz Sharif was elected nearly two years ago.

“Moody’s Investors Service has revised the outlook on Pakistan’s foreign currency government bond rating to positive from stable,” the company said in a statement.

Pakistan issued $1 billion in five-year Sukuk Bonds, the Islamic version of eurobonds, in November last year to boost foreign exchange reserves.

Read: Pakistan raises $1b through Sukuk bonds

In April 2014, the country issued $2 billion worth of eurobonds, in five and 10 year terms.

Read: Pakistan raises $2 billion through Eurobonds

Pakistan’s net foreign currency reserves with the central State Bank reached to $11.2 billion up to March 13, from just $3.2 billion in January 2014.

The International Monetary Fund (IMF) has voiced satisfaction with Pakistan’s progress on reforms required under a $6.6-billion bailout agreed in 2013.

The loan came on condition that Pakistan — which was suffering an energy crisis — would carry out extensive economic reforms, particularly in the energy and taxation sectors.

Moody’s said continued success under the IMF programme would act as “upward triggers to the rating”.

The State Bank of Pakistan on the weekend slashed its benchmark interest rates by half a percentage point to eight percent.

Read:

The bank noted that the economy was now on a more stable footing and was benefiting from the drop in world oil prices.

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Reader Comments (2)

  • Tamaaz Khan
    Mar 25, 2015 - 8:28PM

    This is not rating, its outlook v.imp difference, beacuse an outlook means nothing!Recommend

  • Economist
    Mar 25, 2015 - 11:29PM

    Agree with Tamaaz. Its a change in outlook. However, the change in outlook is always necessary ahead of any change in rating. Hence, the outlook change is still significant and plays strong role in building/breaking investor confidence.Recommend

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