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Business Recorder
an hour ago
- Business
- Business Recorder
Pakistan's three Eurobonds trade at over $1 premium for first time in years
KARACHI: For the first time in recent history, Pakistan's three Eurobonds are trading at a premium price of over $1 a unit in international capital markets at present, suggesting the confidence of global investors on the domestic economy has boosted sharply. 'Pakistan's three Eurobonds are trading at premium for the first time after several years,' State Bank of Pakistan (SBP) Governor Jameel Ahmad said while speaking at the monetary policy press conference on Wednesday. SBP keeps policy rate unchanged at 11% The three bonds include the two maturing in September 2025 and April 2026, he said, recalling Pakistan's Eurobonds were trading 'at deep discount – at one-third of their issue price at 37-38 cents in 2023'. Arif Habib Limited, Head of Research, Sana Tawfik, added the Eurobonds maturing in September 2025 and April 2026 closed Wednesday's trade at 100.28 cents and 100.05 cents, respectively, in the international market. The third bond, maturing in January 2029, closed the day trade at 100.74 cents. There are six Pakistan's Eurobonds trading in global capital markets. The total issuance size of the bonds sum at $6.8 billion. They are maturing between September 2025 and April 2051. SBP governor Ahmad said the country's global bonds had revived after two international credit rating agencies upgraded Pakistan's rating to 'B-' from 'CCC+' along with a stable outlook. He said the boost in global investors' confidence - exhibited through the rising Eurobonds - was achieved in the wake of repayment of foreign debt and interest payments on the debt on time and a notable growth in foreign exchange reserves to $14.5 billion in FY25 compared to $9.4 billion in the prior year. Besides, the return of stability in the domestic economy and rupee-dollar exchange rate, and a jump in inflows of workers' remittances to record high at $38.3 billion in FY25 compared to $32.3 billion in FY24 also played pivotal roles. 10-year Eurobond: $1bn repayment made despite dearth of forex Ahmad said Pakistan would repay a total of $1.8 billion to global investors against the maturity of two Eurobonds falling in the current fiscal year 2025-26. The maturity of the two bonds and increase in the country's credit rating may allow Pakistan to raise new debt from global capital markets through selling new Eurobonds in future. Pakistan to repay a net $10bn in FY26 SBP governor said Pakistan was scheduled to repay $25.9 billion, including rollovers, in FY26. Giving a breakup, he said, the expected rollovers amounted to $16 billion in the current fiscal year 2025-26. However, the country has to pay a net $10 billion over the year. This includes repayment of commercial loans at $3.75 billion and interest payment on the overall debt at $4 billion over the year. Pakistan's overall foreign debt has remained stagnant at around $100 billion for the past three years, suggesting the new borrowing was purely being utilised to repay the maturing debt, Ahmad said. Earlier, the debt had surged by on an average $6 billion a year to $100 billion in the seven years duration.
Business Recorder
2 hours ago
- Business
- Business Recorder
Business community ‘disappointed' at status quo in policy rate
KARACHI: The business community in Pakistan expressed disappointment over the central bank's decision to keep the policy rate unchanged at 11%, arguing that it had undermined business sentiment and posed challenges for industrialists, entrepreneurs, and investors. The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) on Wednesday decided to keep the policy rate unchanged at 11%, a decision that contradicted market expectations, which had anticipated a rate cut of around 50 to 100 basis points (bps). 'Consumer price index (CPI), as per government's own statistics, stood at 3.2% in June 2025; but, the policy rate continues to be 11% as of today – which reflects a premium of 780 basis points (bps) as compared to inflation and it makes no economic sense,' Federation of Pakistan Chambers of Commerce & Industry (FPCCI) president Atif Ikram Sheikh said in a statement. Sheikh lamented that after deliberations from the apex trade and industry platform with all industries and sectors, FPCCI had demanded a single-stroke rate cut of 500 basis points during the Wednesday's MPC meeting to rationalise the key policy rate. Pakistan Hosiery Manufacturers and Exporters Association's (PHMA) central chairman Muhammad Babar Khan said maintaining the key interest rate at 11% would hurt the growth of exporters and manufacturers of different sectors. 'The policy rate maintains a higher level in the region which made its extremely challenging for exporters to further enhance their exports or compete with different countries such as Vietnam, Bangladesh, and India,' Khan said. Here is how much key interest rate has moved in last 12 months Pakistan Chemicals & Dyes Merchants Association (PCDMA) chairman Salim Valimuhammad also labeled the SBP decision a setback for business sentiment and industrial growth. In a statement, he argued that lower interest rates were critical to stimulating economic activity, improving access to affordable loans, and fostering job creation. 'This is not a wise decision in my view,' he stated, pointing to the recent decline in inflation as a reason to cut rates. 'Inflation has already come down, and businesses are under enormous pressure. If such high interest rates continue, it will further burden the business community, which is already struggling.' Pakistan's headline inflation clocked in at 3.2% on a year-on-year (YoY) basis in June 2025, a reading lower than that of May 2025, when it had stood at 3.5%, according to Pakistan Bureau of Statistics (PBS) data. On month-on-month (MoM) basis, it increased by 0.2% in June 2025, as compared to a decrease of 0.2% in the previous month and an increase of 0.5% in June 2024. CPI inflation average during FY25 stood at 4.49% as compared to 23.41% in FY24. 'On one hand, the government claims inflation is decreasing, but on the other hand, the interest rate remains unchanged. This policy inconsistency is damaging economic recovery,' PCDMA chairman said. Rationale to maintain interest rate neither convincing nor economically sound: Bilwani Karachi Chamber of Commerce & Industry (KCCI) president Muhammad Jawed Bilwani said even with inflation at its current level or marginally higher, there remained sufficient room to reduce the interest rate to a single digit, as 'many regional economies have done in similar or even more complex economic environments'. 'By missing this critical opportunity to lower rates, the State Bank has not only dampened hopes for economic revival but also imposed a continued and unnecessary burden on an already strained private sector', he said, adding the SBP decision was not only detrimental to domestic businesses, particularly small and medium enterprises (SMEs) and manufacturers, but 'also risks further stifling economic recovery, employment generation, and industrial revival'. He pointed out that across the region and in comparable economies, monetary policy easing was actively being pursued to support growth. 'For instance, India's policy rate stands at 6.5%, Bangladesh around 8.5%, Indonesia at 6.25%, while Vietnam has brought its rate down to below 5%, all significantly lower than Pakistan's,' Bilwani said.
Business Recorder
4 hours ago
- Business
- Business Recorder
Pakistan central bank sees FX reserves climbing to over $17bn by FY26 end
KARACHI: State Bank of Pakistan (SBP) Governor Jameel Ahmad projected on Wednesday that the central bank's foreign exchange (FX) reserves were expected to rise by $3 billion, reaching $17.5 billion by the end of the fiscal year 2025-26. The growth in the reserves would take place despite foreign debt repayments, including rollovers, totalling at $25.9 billion in FY26, he added. 'The FX reserves could be higher than the targeted $17.5 billion in FY26 if Pakistan raised new debt from global capital market through selling Eurobond,' Ahmad said at SBP monetary policy press conference. The central bank decided to keep the key interest unchanged at 11%. The FX reserves stood at $14.5 billion at the end of FY25 on June 30, 2025. He anticipated that Pakistan's GDP (gross domestic product) would grow in the range of 3.25% to 4.25% in FY26. It may be noted that the International Monetary Fund (IMF) has projected Pakistan's GDP growth at 3.6% for FY26. The growth would be supported by revival in agricultural output and continue improvement in industrial and services sectors, SBP governor said. The current account deficit is expected to be in the range of 0-1% of GDP in FY26, ending the cycle of C/A surplus recorded in FY25. The Monetary Policy Committee (MPC) of the SBP noted that year-on-year inflation was expected to mostly remain in the range of 5–7 percent in FY26, though it might cross the upper bound in some months. The MPC emphasised that the outlook was susceptible to multiple risks emanating from uncertain global commodity prices and trade outlook, unanticipated adjustments in administered energy prices, and potential widespread floods.
Express Tribune
4 hours ago
- Business
- Express Tribune
PSX closes up as State Bank leaves rate unchanged
Listen to article The Pakistan Stock Exchange (PSX) witnessed a mixed session on Wednesday as investors remained cautious ahead of the State Bank of Pakistan's (SBP) policy rate announcement. However, late-session buying lifted the benchmark KSE-100 index by nearly 450 points. The index fluctuated between the intra-day high of 139,018.88 and low of 137,658.81. It closed with a gain of 447.43 points, or 0.32%, at 138,412.25. Sentiment shifted in the latter half of the session after the SBP unexpectedly maintained its benchmark policy rate, defying market expectations of a 50-basis-point cut. The decision triggered a broad-based rally in the banking sector, with notable gains in major names such as United Bank, Habib Bank, and MCB Bank. Market Snapshot – July 30, 2025 Unlock today's market moves and stay one step ahead! — PSX (@pakstockexgltd) July 30, 2025 'The market ended on a positive note as banks rallied following the SBP's announcement to keep the policy rate unchanged, contrary to market expectations of a cut of 50 basis points,' AKD Securities Director Research Mohammed Awais Ashraf told The Express Tribune. Additionally, Systems Limited surged after acquiring British American Tobacco's SAA services to fuel its future growth. He expected interest rates to decline to single digits, supported by easing inflation and stability in the foreign exchange market due to lower debt repayments this year. KTrade Securities, in its market wrap, wrote that stocks saw a mixed session as investors awaited the central bank's policy rate decision. The KSE-100 index fluctuated between the intra-day low of 137,659 and high of 139,019, eventually closing up by 447 points at 138,412. Read More: SBP keeps interest rate at 11% Late in the session, the SBP announced that it had kept the interest rate unchanged, citing inflationary pressures and concerns over the trade deficit. Market players also remained focused on a potential US-Pakistan trade deal, which is likely to be finalised soon, it said. Arif Habib Limited (AHL) observed that the KSE-100 rose from the support zone to regain the 138k level. Some 41 shares rose, while 59 fell, with Systems Ltd (+6.9%), United Bank (+2.08%), and Habib Bank (+3.21%) contributing the most to index gains. On the contrary, Fauji Fertiliser (-0.7%), Lucky Cement (-1.51%), and Engro Holdings (-0.94%) were the biggest drags. In corporate news, Engro Fertilisers announced 1HCY25 earnings per share (EPS) of Rs6.34 (+10% YoY) and a dividend of Rs6.50 per share, which came in line with expectations. In financial news, Finance Minister Muhammad Aurangzeb is in the US to conclude trade talks, with final discussions this week, while the SBP held its benchmark rate steady for the second meeting amid inflation and tariff uncertainty, despite expectations of a reduction. Overall trading volumes decreased to 425.8 million shares compared with Tuesday's tally of 606.3 million. Traded value stood at Rs25 billion. Shares of 476 companies were traded. Of these, 152 stocks closed higher, 290 fell, and 34 remained unchanged. The Bank of Punjab led the volumes chart with trading in 24.8 million shares, rising Rs0.25 to close at Rs13.72.
Arab News
5 hours ago
- Business
- Arab News
Pakistan central bank surprises by holding key rate steady at 11%
KARACHI: Pakistan's central bank left its key interest rate unchanged at 11% on Wednesday, saying the inflation outlook had worsened a little due to energy price fluctuations, surprising analysts who had expected another cut. In a Reuters poll this week, all 15 analysts said they expected the SBP to ease, with nine forecasting a 50-basis-points cut, four predicting a deeper 100-basis-points reduction and two projecting a smaller 25-basis-points cut. The decision came as Pakistan pushes reforms under a $7 billion IMF program and a contractionary budget to curb deficits. In its Economic Outlook Update on Tuesday, the IMF cut its growth forecast for the fiscal year ending June 2026 to 3.6%, well below the government's 4.2% target. 'The Monetary Policy Committee (MPC) ... noted that the inflation outlook has somewhat worsened in the wake of higher than anticipated adjustment in energy prices, especially gas tariffs,' the State Bank of Pakistan (SBP) said in a statement. The panel also noted that the trade deficit was expected to widen further in the fiscal year ending June 2026 amid a pickup in economic activity and a slowdown in global trade. 'Given this macroeconomic outlook and the emerging risks, the MPC considered today's decision as necessary to ensure price stability,' it said. The SBP had held rates in June after a 100-basis-points cut in May that resumed easing following a March pause. Since June 2024, it has lowered its policy rate by 1,100 basis points from a record 22% as price pressures receded. Headline inflation slowed to 3.2 % in June and is projected at 3.5%–4.5% in July, within the SBP's 5.5%–7.5% target range for the fiscal year ending June 2026. The government says the economy has stabilized, but analysts warn growth remains fragile and global commodity price swings could still add pressure on prices and external balances.
