Pakistan raises over $4.2 billion in bond auction, launches first 15-year zero coupon issue
KARACHI: Pakistan raised more than Rs1.2 trillion ($4.2 billion) in a government bond auction on Wednesday, including the launch of its first-ever 15-year zero coupon bond, in a move the finance ministry said marked a shift toward longer-term and more diversified debt instruments.
The new zero coupon bond, which does not pay periodic interest but offers a lump sum at maturity, garnered strong investor demand and raised over Rs47 billion ($164.5 million).
The instrument is part of the government's broader debt management strategy aimed at reducing short-term refinancing risk, encouraging Islamic finance and expanding the country's long-term investment landscape.
'This is a major step forward in making Pakistan's financial system stronger and more resilient,' the country's finance minister, Muhammad Aurangzeb, said in a statement.
'We are introducing new, smart ways of borrowing that reduce risk and give investors more options,' he added. 'Our aim is to manage public debt responsibly, promote Islamic finance and attract more long-term investment to support the country's economic growth.'
The ministry noted the auction saw declining yields across other government securities, reflecting market optimism over moderating inflation and expectations of lower interest rates.
It said the average maturity of domestic debt had also risen from 2.7 years to 3.75 years, easing near-term repayment pressure.
The ministry noted the investor base was also broadening, with more participation from pension funds and insurance companies in addition to commercial banks.
It maintained the diversification helps distribute financial risk and deepen Pakistan's local capital markets.
Officials also informed additional savings instruments for ordinary citizens, particularly Shariah-compliant bonds, are in development to foster retail investment and financial inclusion.
Despite ongoing global economic uncertainty, the ministry said the auction results reflect renewed investor confidence in Pakistan's economic direction and reform efforts.
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