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Pakistan raises $750m through 10-year dollar bond

The launch that took place in New York, "received total offers of $3.538 billion, showing more than seven times higher subscription than targeted $500 million," said the prime minister.

He described it as "a vote of confidence from international investors" in Pakistan's policies, leadership and economic situation.

He said the pricing of the bond at 6.875 per cent was much better than previous bond that carried an interest rate of 7.125 per cent.

He said Pakistan did not require funds but the issue was meant to maintain a constant contact with the international investors as part of brand building exercise.

He did not agree that the bond was meant to bridge rising budgetary deficit, saying it was already envisaged under the budgetary projections for capital inflows for the year. The Prime Minister said it was an important event of the year and the government would go for more such issues next year.

The investor base, he said, equally spread among Asia, European Union and the United States.

The government had mandated Citibank, Deutache Bank and HSBC for this capital market financing and two road shows were simultaneously held in the Europe and New York.

Pakistan returned to the international financial market with a Rule 144A/Regulations S. bond issue for general budgetary support.

The rule makes the securities eligible for purchase and trade by institutional US investors.

This will be Pakistan's fourth international bond in the last five years. Last year Pakistan sold $800 million in a dual-tranche sovereign bond, comprising $500 million in a 10-year issue and $300 million in 30-year paper. The proposed new sovereign bond is likely to be for 15 and 20 years maturity period.

In 2004 Pakistan raised $500 million through five-year sovereign Eurobond and in 2005 it issued $600 million five-year Sukuk against which it had to pledge certain sections of the Motorway project.

Replying to a question, the Prime Minister defended his policies on first allowing wheat exports and then suspending it as the crisis emerged. He said the exports were allowed to deplete last year's carry over stocks and to facilitate procurement of new crop produce. He said the international prices were so high that the entire crop output would have been moved to the neighbouring markets, had exports not halted.