Karachi, September 28, 2015 (PPI-OT): Is Eurobond auction a day late and a dollar short
The country raised a new Eurobond of USD500mn with a maturity of 10-years and the coupon rate of 8.25%, in the international market last Thursday. With global markets mired in uncertainty, unimpressive response from the international investors forced the country’s economic managers to limit Eurobond issue to USD500mn as opposed the budgeted target of USD1bn for the current fiscal year.
Although the coupon rate seems to be on the higher side considering the improving external outlook and upgradation of rating, Elixir Securities Limited has the view that this auction has reduced uncertainty over the arrangement of funds which the government has to pay to international lenders at the end of March, 2016, when one outstanding USD500mn Eurobond will mature.
In short, outlook for international debt market looks bleak with Fed Reserve slated to hike interest rates in the coming months and delaying Eurobond auction would have added to uncertainty over arrangement of funds.