Pakistan Bond Divergence Shows Investor Unease Over IMF Program
- Short-term dollar bonds have outperformed long ones since deal
- Nation’s ability to muddle through has improved, Vontobel says
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The divergence between different Pakistan bond maturities has been widening since news emerged last month of an International Monetary Fund cash injection, showing investors remain unconvinced about the nation’s ability to pay long-term.
Prices of the nation’s $1 billion debt due April 2024 have jumped to about 80 cents on the dollar from about 50 cents in late June, about twice the gains seen in bonds due 2031. News was finally confirmed last week that Pakistan had won approval to borrow $3 billion from the IMF, releasing funds to help ease its immediate cash needs.