- Offer oversubscribed by 4 times as eager investors help reduce yield to 7.5%
Water and Power Development Authority (WAPDA) has successfully raised $500 million from the international markets at 7.5% on Thursday, completing a landmark deal not just for Pakistan’s power sector, but also the country’s first green bond issuance.
Early details indicate the bond issue was also oversubscribed by over 4 times, attracting $2.2 billion, and bringing down the initial guidance level that suggested a rate close to 8%, according to officials familiar with the matter.
The bond issuance is being seen as another positive development for the government that announced the country's economy grew at 3.94%, a sharp reversal from the contraction in the previous year.
It also gives Pakistan breathing space as it looks to raise more environmentally-friendly debt over the next two years, according to Wapda Chairman Muzammil Hussain, who was quoted in Bloomberg ahead of the bond issue.
The funds from the bond will be used to fund the Diamer Basha and Mohmand dams, added Hussain.
“We are taking a lead against fossil fuel,” he said.
The issuance comes at a time when investors remain hungry for green debt, with Pakistan's plans for greater push in the renewable and hydroelectric power generation making for a nice combination in the international debt markets.
Pakistan is also targeting economic growth of 5%, added the Bloomberg report, in the year starting July with the help of spending on large infrastructure projects.
Wapda had received a ‘B-‘ or ‘Stable’ rating from credit-ratings agencies including Fitch and Standard & Poor’s (S&P) in March 2020.
Pakistan also raised $2.5 billion of dollar bonds in March.