Pakistan eyes $2 billion Eurobond, Sukuk issuance and fresh loans to bridge financing gap

Pakistan is considering issuing Eurobonds and Sukuk worth more than $2 billion, and borrowing up to $2.5 billion in fresh loans from international financial institutions to address a financing gap ahead of its next International Monetary Fund (IMF) review in September, officials familiar with the matter said.

The government is expected to initiate discussions with top-tier international investment banks—including Morgan Stanley, Deutsche Bank, Standard Chartered Bank, and Dubai Bank—to facilitate the issuance of Eurobonds and Sukuk in the next fiscal year.

Pakistan faces external financing needs of around $19 billion in the upcoming fiscal year, including interest and principal debt payments as well as a projected current account deficit of $1.5 billion. To secure the next tranche from the IMF, authorities must bridge a financing gap of approximately $2 billion to $3 billion.

Financial advisors will be tasked with guiding the government on the optimal timing, size, and maturity structure of the bond issuances.

Following the IMF’s recent loan approval, Pakistan anticipates a potential credit rating upgrade from Moody’s and S&P Global, which would strengthen investor confidence and improve market access.

“This is the best time to float international bonds, as Pakistan could attract offers in the range of 6.75% to 8% for tenors of three, five, and 10 years,” an analyst said.

In parallel, Finance Minister Muhammad Aurangzeb and senior officials are in discussions with foreign commercial lenders—including Standard Chartered Bank, Dubai Islamic Bank, Industrial and Commercial Bank of China (ICBC), and several UAE-based institutions—for loans amounting to between $1.5 billion and $2.25 billion. These short-term borrowings are expected to help Pakistan meet its near-term debt obligations.