Pakistan Moves Forward with Innovative Dollar-Linked Bonds and Expands Eurobond Sukuk Offerings

Islamabad has launched requests for proposals (RFPs) to engage advisers for its first dollar-settled, rupee-linked bonds, along with additional Sukuk and Eurobond issuances, Finance Minister Muhammad Aurangzeb announced on Tuesday. The initiative aims to broaden Pakistan’s investor base and extend the maturity profile of its external debt, signaling confidence in renewed access to global capital markets.

These strategic fundraising efforts follow Pakistan’s successful reentry into international markets this year, marked by a well-received $750 million Eurobond and an oversubscribed $250 million Panda bond. Both transactions demonstrated strong investor appetite and underscored the government’s ability to secure favorable financing terms amid macroeconomic stabilization under a $7 billion IMF program.

By diversifying its range of financing instruments, Pakistan seeks to reinforce its external funding strategy. Finance Minister Aurangzeb emphasized that the proposed securities will complement ongoing efforts to restructure debt obligations while enhancing the country’s long-term financial resilience.

“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 stated during the 2026 Pakistan Banking Summit in Karachi.

The dollar-settled, rupee-linked bonds will provide international investors with exposure to the Pakistani rupee while enabling settlements in U.S. dollars. This structure aims to attract foreign capital without requiring local currency transactions, reducing exposure to exchange rate volatility for lenders.

TheFinance Minister highlighted that the inaugural Panda bond achieved record-low pricing for a three-year sovereign issue, with an oversubscription exceeding fivefold. This success reflects the market’s confidence in Pakistan’s economic reforms and debt management approach.

While the new issuances are primarily intended to refinance existing obligations, Aurangzeb noted that some components may also address bilateral debt obligations. “A lot of these are going to be actually replacement trades,” he explained. “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.”

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