ISLAMABAD – Pakistan’s sovereign bonds fell up to 5% over the last 24 hours as investors were caught off guard by candidates criticizing state-backed parties in the country’s general elections.
Analysts said the 2024 bond dropped 1.8% to around 96 cents on the dollar. The 2025, 2026 and 2027 bonds plunged 4.3%, 4.5% and 4.3% respectively, trading at 84 cents, 75.6 cents and 71.6 cents on the dollar.
The January 2029 maturity yield fell 5% to 80.6 cents. The April 2031 coupon yield declined to 64.7 cents, while the 2036 bond yield dropped 4.5% to 65.6 cents.
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The government paper maturing in April 2051 showed a 5% decrease, trading slightly above 61 cents on the dollar.
Experts attribute the bond selloff to investor caution over Pakistan’s political turmoil. Results from yesterday’s voting are still unclear, leaving the country’s fate uncertain.
Foreign investors may further curb investment if unrest follows the contentious poll results. FIPI inflows could suffer and impact next week’s stock market performance.
In January, Pakistani dollar bond yields had surged 9% amid global highest returns. But election commission delays threaten this trend, per analysts.
Moody’s warned swift results are key to reduce uncertainty and aid new government formation. It stated Pakistan needs a long-term strategy to repay large debts.
The bond rout highlights how political instability can dent market confidence. Pakistan hopes to reassure investors once a new administration takes charge after the divisive elections.
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