Pakistan has issued requests for proposals (RFPs) for advisers to arrange its first dollar-settled, rupee-linked bonds alongside fresh Sukuk and Eurobond issues, Finance Minister Muhammad Aurangzeb said on Tuesday. The move aims to broaden the investor base and lengthen the maturity profile of the country's external debt.
Building on Successful Capital Market Return
The latest fundraising plans follow Pakistan's successful return to international capital markets this year through a $750 million Eurobond and its inaugural $250 million Panda bond, both of which attracted strong investor demand. The government now seeks to build on that momentum by expanding its range of financing instruments as part of a medium-term strategy to diversify external funding sources after macroeconomic stabilization under a $7 billion International Monetary Fund (IMF) program.
“We have just issued RFPs for Sukuks, for Eurobonds, and for the first time, dollar-settled, rupee-linked bonds, because we do want to go back into the international capital market and extend the maturities of our international debt as we move forward,” Aurangzeb said while addressing the Pakistan Banking Summit 2026 in Karachi.
Innovative Dollar-Settled Rupee Bonds
The planned dollar-settled, rupee-linked bonds would give international investors exposure to the Pakistani rupee while settling transactions in US dollars. This structure allows the government to tap foreign capital without requiring investors to settle in the local currency, potentially attracting a wider range of global investors.
Aurangzeb noted that Pakistan’s inaugural Panda bond was oversubscribed more than five times, enabling the government to secure what he described as a record-low price for a three-year sovereign issue. The strong demand signals growing international confidence in Pakistan's creditworthiness following economic reforms.
Refinancing, Not New Debt
The finance minister emphasized that the planned bond sales are intended primarily to refinance existing obligations and improve Pakistan’s debt profile rather than increase the country's external debt. “A lot of these are going to be actually replacement trades,” he said. “These are not going to be incremental debt that we have and how we replace some of the bilat stuff, I think, is going to be part of the picture as we move forward.”
By replacing bilateral loans with market-based instruments, Pakistan aims to lengthen maturities and reduce refinancing risks. The strategy aligns with the government's broader fiscal consolidation efforts under the IMF program, which has helped stabilize the economy after a period of balance-of-payments pressures.
Outlook for International Capital Markets
The issuance of dollar-settled rupee bonds, Sukuk, and Eurobonds will depend on market conditions and adviser selection. Pakistan's return to international markets earlier this year with oversubscribed issues suggests strong appetite for emerging market debt, particularly from investors seeking higher yields in a low-interest-rate global environment.
Analysts say the success of the new instruments will hinge on sustained macroeconomic stability and continued reform momentum. The government remains committed to fiscal discipline and broadening its funding base to reduce reliance on bilateral and multilateral loans.
