LAHORE: Pakistan on Tuesday raised additional debt of $1 billion through a tap issue of its recently issued three-tranche dollar denominated Eurobond that had fetched $2.5bn in March.

The bond was subscribed in excess of $3bn for five, 10 and 30 years. Pakistan accepted $300m for five-year note at 5.875pc, $400m for 10-year bond at 7.125pc and $300m for 30-year paper at 8.450pc.

Pakistan had adopted a programme-based approach with the registration of Global Medium-Term Note (MTN) programme, which allows it to tap the market regularly and at a short notice, Fahad Rauf, head of research at Ismail Iqbal Securities, told Dawn.

MTN allows continuous or intermittent fund raising from the investors through the designated or appointed dealers. Under this programme, a bond is registered only once. However, the issuer can enter the foreign markets more easily to obtain capital under the MTN.

Pakistan gave initial price guidance of 6-6.125pc for a five-year tranche due in 2026, around 7.375pc for 10-year bonds maturing in 2031 and around 8.875pc for 30-year note due in 2051.

“The timing of tap issue is critical as currently the int­erest rates are low globally and the market has ample liquidity,” Fahad said.

Pakistan’s external financing needs are growing where the net external financing target through commercial sources for FY22 is around $5.5bn, out of which Eurobond/sukuk issuance is targeted at $3.5bn, he added.

The IMF programme is also on hold, which may become a challenge to raise funds in future. “Thus, it is better to tap the markets now. Pakistan’s external account situation is also better now; but some pressure could be witnessed in future as indicated by the rising trade deficit,” he argued.

Credit Suisse, Deutsche Bank, Emirates NBD Capital, JPMorgan and Standard Chartered are arranging the deal.