Pakistan emerges as world's second most improved credit risk: Bloomberg

Pakistan has emerged as one of the world’s most improved economies in terms of sovereign credit risk, posting one of the sharpest declines globally in default probability over the past 15 months, according to newly released data by Bloomberg.

The country's Finance Ministry shared the data of Bloomberg and said it ranked second only to Turkey among emerging markets, Pakistan saw a dramatic drop of 2,200 basis points in its five-year Credit Default Swap (CDS)-implied default probability from June 2024 to September 2025.

The country also distinguished itself as the only emerging market to post consistent quarterly improvements during the period.
This shift signals growing investor confidence in Pakistan’s economic trajectory, bolstered by signs of macroeconomic stabilization, adherence to an IMF-supported reform agenda, and favorable credit ratings actions by global agencies including S&P, Moody’s, and Fitch.

Pakistan’s sovereign risk profile now stands in contrast to several peer economies, such as Argentina, Egypt, and Nigeria, which have seen increases in their respective default risks.

“This data point is a significant message to investors: Pakistan is steadily rebuilding market credibility and standing out as one of the most improved sovereign credit stories in the emerging market universe,” said financial analyst Khurram Schehzad in a social media post, referring to Bloomberg’s rankings.

In recent months, Islamabad has made timely external debt payments, curbed inflationary pressures, and continued structural reforms under the guidance of the International Monetary Fund (IMF), actions widely viewed as instrumental in regaining investor trust.

The CDS-implied probability of default is a key barometer used by investors to assess sovereign credit risk. A decline of this magnitude suggests markets are pricing in a lower likelihood of Pakistan defaulting on its external obligations—an important turnaround for a country that faced acute balance-of-payments stress just over a year ago.

The government is now preparing for fresh negotiations with the IMF for a longer-term program, following the conclusion of a short-term bailout earlier this year.