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LONDON: Pakistan’s international bonds dropped more than 1 cent on Wednesday after Islamabad said it has “credible intelligence” that India intends to launch military action soon as tensions escalate between the nuclear-armed neighbours.

The 2036 bond suffered the biggest decline, falling 1.3 cents to be bid at 71.85 cents in the dollar, Tradeweb data showed, though bid-ask spreads of around 1 cent pointed to limited liquidity.

Pakistan’s sovereign dollar bonds slide as tensions with India rise

Relations between the two countries have been fraying since an April 22 attack on tourists in Indian Illegally Occupied Jammu and Kashmir (IIOJK) that killed 26 people.

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