Daisy Watts
Feb 10, 2024
Following the election result saga, Pakistan’s dollar bonds, due in 2051, were trading at 60.8 cents against the dollar as they were indicated as much as 5 cents lower — which was the most since September 2022.
According to Bloomberg, the 2029 and 2031 notes also dropped as the uncertainty surrounding the general elections 2024 results tickled in.
Investors and credit rating agencies are watching the polls closely, to see if a government that will push for tough reforms will be elected. Pakistan had earlier suspended mobile services across the country, defending the measure as a way to maintain order amid militant incidents.
Read more: Pakistan stock crash as polls uncertainty fuel profit-taking
Arqaam Capital Head of Fixed-Income Asset Management Abdul Kadir Hussain said: “Uncertainty not only about the election results but also about the legitimacy of those results, is causing weakness in bond prices.”
“A stable political setup is required to negotiate and implement the International Monetary Fund (IMF) programme, without which debt sustainability is doubtful. So far indications are that the political setup will be far from stable,” he said.
According to Tradeweb data, the South Asian country is struggling to recover from an economic crisis while it grapples with rising militant violence in a deeply polarised political environment. Most of its sovereign dollar bonds slipped, with the September 2025 bond dropping to 85 cents on the dollar.
Moody’s Investor Services said that a timely announcement of election results would reduce political uncertainty in Pakistan. “A timely announcement of the results, leading to a smooth formation of a new government, will reduce policy and political uncertainty,” Grace Lim, a Moody’s analyst, said.
“This is crucial for the country that is facing very challenging macroeconomic conditions, with fragile balance of payments, weak growth and high inflation,” Lim said the new government would need to negotiate for another IMF programme after the current one expires in April 2024.
"Even under a new IMF programme, the new government will be tested on its willingness and ability to implement and sustain reforms, particularly revenue-raising measures, that may be politically unpopular, but necessary to improve macroeconomic conditions."
