Pakistan’s finance ministry on Sunday rejected what it described as “misleading” reports alleging irregularities in the country’s sovereign financing transactions, saying its Eurobond and inaugural Panda bond issuances complied with all legal, regulatory, procurement and approval requirements.
Lawmaker Raises Questions on Competitive Bidding
The statement came after a lawmaker raised questions about whether any competitive process was followed to borrow $750 million against Eurobonds as details showed the finance ministry had also received an offer from Citibank with a five-year maturity period. The ministry opted for a relatively shorter three-year tenor debt at roughly 7 percent interest despite Citibank’s offer of up to $1 billion at 7.25 percent to 7.37 percent, according to local media reports.
The lawmaker, Aliya Kamran, also questioned whether mandates for the $1 billion syndicated term finance facility of June 2025, the $750 million Eurobonds placement of April 2026 and the $250 million Panda Bonds of May 2026 were awarded to Habib Bank Limited (HBL) and Standard Chartered Bank (SCB) without an open and competitive process under the Public Procurement Regulatory Authority (PPRA) rules of 2024.
Finance Ministry’s Categorical Rejection
In a statement issued on Sunday, Pakistan’s Ministry of Finance categorically rejected “misleading” reports on Pakistan’s sovereign financing transactions and said the claims were based on “incomplete information and omit critical facts and context.” “Both the Eurobond and Pakistan’s inaugural Panda Bond complied with all applicable legal, regulatory, procurement and approval requirements,” the ministry said. “Comparisons based solely on headline coupon or tenor are misleading.”
HBL had earlier clarified it did not receive any fee for the Panda Bond transactions. In April this year, Pakistan raised $750 million as a private placement through SCB, with no competitive bidding, finance ministry officials said after the transaction was concluded. The debt was raised at 6.98 percent interest for a period of three years, Pakistan’s Express Tribune newspaper reported this week, citing officials.
Legal Context and Complexity of Sovereign Financing
The federal government can raise commercial debt without competitive bidding, but at the time of raising the $750 million debt there was no such exemption for raising Eurobond debt, it reported, citing sources. Comparisons based solely on headline coupon or tenor are “misleading.” Sovereign financing decisions are highly complex and based on a comprehensive assessment of pricing, tenor, execution certainty, underwriting commitment, timing, total transaction costs, credit spread to benchmarks, prevailing market conditions and alignment with Pakistan’s Medium-Term Debt Management Strategy (MTDS), according to the finance ministry statement.
The government selects the financing option that offers the “optimal” balance of pricing, tenor, execution certainty, timing and risk, consistent with its MTDS. “Administrative matters relating to institutional appointments have no bearing on the legality or governance of sovereign financing transactions,” the ministry said. “The dissemination of inaccurate and misleading information risks undermining investor confidence, damaging Pakistan’s credibility in international capital markets, increasing future borrowing costs and prejudicing the country’s strategic financing objectives.”
