Pakistan’s risk of default spikes to 13-year high of 52.8%

[HAIDER]

Pakistan’s risk of default spikes to 13-year high of 52.8%​

ByMirror Web
October 26, 2022
Updated: 6 hours ago
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Picture source - Reuters
The cost to safeguard the sovereign debt of Pakistan from default has reached a 13-year high at 52.8 percent due to the rating downgrades and worries about debt restructuring among international investors over its ability to meet bond payments.
Five-year credit default swap (CDS) rose 3,071 basis points day-on-day to 52.8%, data released by Arif Habib has shown.
The factors mentioned responsible for the surge in CDS and bond yields include a balance of payments issue due to the State Bank of Pakistan’s reserves falling to a value that is not enough to cover a month’s imports, Pakistan’s rating downgrades by Moody’s and Fitch, globally rising interest rates, weakening rupee, geopolitical turbulence and supply chain disruptions pushing commodity prices higher.
The yield on the five-year Pakistan International Sukuk Company Limited bond climbed to 139.74% by 75 basis points.
The yield on a 10-year Eurobond maturing on April 15, 2024 has increased to 92.93% from 89.58%. A 10-year Eurobond’s yield, which is due on September 30, 2025, went up to 59.07% from 57.63%.
However, analysts have said that the market will gain confidence if Pakistan repays the maturity amounts smoothly. Chinese and Saudi rollovers could be helpful in improvement, according to analysts.
42% of Pakistan’s debt has been owed to multilateral sources while 40% to bilateral creditors, 7% to the global bond market, and 7% to commercial banks.

 

[SoulSpokesman]

@HAIDER

Haider bhai,

It is a tough situation for all EMs which are net energy importers but not export powerhouses (like China, Vietnam etc). There are almost 50 such countries now. Lets pray that Putler and the Ukrainian clown have the good sense to call off the war and that energy prices normalise.

Regards

 

[epebble]

Pakistan’s risk of default spikes to 13-year high of 52.8%​

ByMirror Web
October 26, 2022
Updated: 6 hours ago
https://www.facebook.com/sharer.php?u=https://minutemirror.com.pk/pakistans-risk-of-default-spikes-to-13-year-high-of-52-8-69690/
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https://minutemirror.com.pk/pakistans-risk-of-default-spikes-to-13-year-high-of-52-8-69690/#
Picture source - Reuters
The cost to safeguard the sovereign debt of Pakistan from default has reached a 13-year high at 52.8 percent due to the rating downgrades and worries about debt restructuring among international investors over its ability to meet bond payments.
Five-year credit default swap (CDS) rose 3,071 basis points day-on-day to 52.8%, data released by Arif Habib has shown.
The factors mentioned responsible for the surge in CDS and bond yields include a balance of payments issue due to the State Bank of Pakistan’s reserves falling to a value that is not enough to cover a month’s imports, Pakistan’s rating downgrades by Moody’s and Fitch, globally rising interest rates, weakening rupee, geopolitical turbulence and supply chain disruptions pushing commodity prices higher.
The yield on the five-year Pakistan International Sukuk Company Limited bond climbed to 139.74% by 75 basis points.
The yield on a 10-year Eurobond maturing on April 15, 2024 has increased to 92.93% from 89.58%. A 10-year Eurobond’s yield, which is due on September 30, 2025, went up to 59.07% from 57.63%.
However, analysts have said that the market will gain confidence if Pakistan repays the maturity amounts smoothly. Chinese and Saudi rollovers could be helpful in improvement, according to analysts.
42% of Pakistan’s debt has been owed to multilateral sources while 40% to bilateral creditors, 7% to the global bond market, and 7% to commercial banks.

If you go by this https://www.dawn.com/news/1716801/analysis-are-more-loans-the-answer-to-pakistans-empty-coffers there may not be any liquidity. Dar has remained remarkably silent over last week after his return. He might have failed to drum up any more liquidity.

 

[HAIDER]

If you go by this https://www.dawn.com/news/1716801/analysis-are-more-loans-the-answer-to-pakistans-empty-coffers there may not be any liquidity. Dar has remained remarkably silent over last week after his return. He might have failed to drum up any more liquidity.

Yes, this PDM govt needs to understand they have to fix their governance, it's an economic meltdown all over the world ..Plus Dar is a CPA accountant ..not an economist ...
I know its a bitter reality,, Pakitan should go for Bankruptcy ..and restructure all loans and reform tax system.

 

[nahtanbob]

@HAIDER

Haider bhai,

It is a tough situation for all EMs which are net energy importers but not export powerhouses (like China, Vietnam etc). There are almost 50 such countries now. Lets pray that Putler and the Ukrainian clown have the good sense to call off the war and that energy prices normalise.

Regards

Ukraine does not export energy. Leave them out.

Most of the energy producers other than Russia can increase production but they are greedy. When the Saudis increase oil prices you will have dimwits like Pakistani leadership that express solidarity with them. Of course the Democrats are foolish enough to believe they can eliminate fossil fuels.

You get exactly what you want.

Yes, this PDM govt needs to understand they have to fix their governance, it's an economic meltdown all over the world ..Plus Dar is a CPA accountant ..not an economist ...
I know its a bitter reality,, Pakitan should go for Bankruptcy ..and restructure all loans and reform tax system.

you have to live within your means. otherwise bankruptcy is a short term bandage

 

[Clutch]

Yes, this PDM govt needs to understand they have to fix their governance, it's an economic meltdown all over the world ..Plus Dar is a CPA accountant ..not an economist ...
I know its a bitter reality,, Pakitan should go for Bankruptcy ..and restructure all loans and reform tax system.

In Pakistanis ruling elites are only in it to rape and pillage...

I say take more Billions of dollars of loans from IMF and start selling baby organs forcefully from the slave population... And of course givrr the nukes as collateral

 

[SoulSpokesman]

@Clutch

And of course gives the nukes as collateral

Actually this can bring in a huge one time windfall for sure. But the question is what after that? Unless the basic governance improves and economy is turned around, the windfall will be squandered and Pak will be back in the same mess 10-15 years down the line.

Regards

 

[ghazi52]

Pakistan's risk of default, measured by the 5-year credit default swap (CDS), on Tuesday spiked by 3.07 percentage points in a day and hit a 13-year high at 52.8%, suggesting foreign investors had lost their faith in the country's economy. The CDS hovered around 5% to 6% before the Covid-19 outbreak in Pakistan in February 2020.

 

[ghazi52]

No comments ....

 

[epebble]

Not good if Finance minister has to convince his bankers publicly. Should have been private.

In his meetings, Mr Dar sought to convince both bankers and dealers that Pakistan remains a solvent state, capable of meeting its foreign debt payment obligations in spite of its depleting foreign currency reserves.

Market uncertainty

FINANCE Minister Ishaq Dar spent a busy day in Karachi over the weekend, meeting senior bankers and foreign currency...

www.dawn.com

 

[SoulSpokesman]

@epebble

Not good if Finance minister has to convince his bankers publicly. Should have been private.

Unavoidable. Pak's liquidity woes are far too deep to be hidden.

Regards

 

[maithil]

https://twitter.com/x/status/1587357514710093827

https://twitter.com/x/status/1587386754297995270

 

[epebble]

Delay in IMF deal may cause Pakistan to pause repayments, warns report​

Delay in IMF deal may cause Pakistan to pause repayments, warns report

Economist it’s still not clear “whether and when Pakistan can receive the next instalment from the IMF.”

www.dawn.com