Aurangzeb Announces Plan For Rupee-Denominated, Dollar-Settled Bond.
✧ GENERATE BRIEFING +
Finance Minister Muhammad Aurangzeb has announced that Pakistan is preparing to issue a rupee-denominated, dollar-settled bond, marking a strategic shift to diversify the country’s financing base and ease heavy reliance on domestic commercial banks. Speaking at the National Strategic Dialogue on PPPs and Privatisation in Islamabad, Aurangzeb revealed that financial institutions have already been formally mandated to structure the novel instrument, though specific details regarding size, maturity timelines, and launch dates remain unconfirmed. The proposed instrument allows international and non-banking investors exposure to rupee-denominated assets while settling transactions in U.S. dollars. This initiative follows on the heels of Pakistan’s successful $3 billion dual-tranche Eurobond transaction, alongside parallel explorations into Panda Bonds, Sukuks, and potential debt tokenization. Economic leadership hopes these diversified debt capital market strategies will attract non-bank financial institutions and insurance funds, mitigating systemic risks tied to domestic banking dependency.
Pakistan plans to introduce a rupee-denominated bond that will be settled in US dollars, as the government seeks to diversify its borrowing sources and reduce reliance on domestic banks, Finance Minister Muhammad Aurangzeb said on Friday.
Aurangzeb said the government has already mandated financial institutions to work on the proposed instrument, although he did not disclose its size, maturity or expected launch date.
The proposed bond would give investors exposure to the Pakistani rupee while settling payments in dollars, potentially allowing Pakistan to tap international capital without requiring investors to settle transactions directly in the local currency.
The announcement follows Pakistan’s successful $3 billion dual-tranche Eurobond sale, comprising a $1.75 billion 5.5-year bond at a 7.5% coupon and a $1.25 billion 10-year bond at a 7.9% coupon. The issue attracted around $6 billion in orders, according to reports.
Aurangzeb said Pakistan needs to broaden its financing base and strengthen its debt capital market, including by increasing access for domestic and international investors.
The government has also been working to expand retail participation in government securities, including digital access that allows individuals to invest directly in sovereign debt instruments.
