With interest rates over 13pc, Pakistani bonds become lucrative option for international investors

• The amount is more than what the global investors have invested in debt in past four years.
• The development is due to the high interest in the Pakistani bonds and govt efforts to improve public finances.

Boosting double digit interest, Pakistani bond market has become a lucrative option for international investors, which have piled up $642.5 million into local-currency bonds in November only.

Citing State Bank of Pakistan (SBP) data, Bloomberg reported that the amount is more than what the global investors have invested in debt in the past four years.

As per the report, the development is due to two factors. Firstly, it is high interest in the Pakistani bonds, the country’s central bank has more than doubled its policy rate to 13.25% – the highest in Asia – to help stabilize the economy.

Secondly, the government efforts to improve public finances with support from the International Monetary Fund (IMF) has helped made Pakistani bonds an attractive option for the international investor.

Pakistan 'stands out' in a low-yield global environment, says Bilal Khan, who is a senior economist at Standard Chartered Plc in Dubai. “Following the recent rate hikes and currency adjustment – and more broadly, the reform momentum under the IMF,” he added.

As per the report, foreign inflows in November have all gone into Treasury bills, which have a maximum holding period of 1 year, with 55 percent of them coming from the UK and 44pc from the U.S.