ISLAMABAD: Finance Minister Ishaq Dar has rejected reports that Pakistan was facing default risk, saying according to Bloomberg it only stood at 10 per cent “as opposed to the claims of 93%”.
The perception of Pakistan’s risk of default worsened with the five-year credit default swap (CDS) surging by 30 percentage points in a week to 93% on Monday ahead of the repayment of $1 billion for a maturing international bond early next month.
According to a research house, the CDS had been at 4.2% in January 2021.
However, the finance minister on Friday shared a purported infographic of Bloomberg about the estimated default probability in emerging markets.
“Bloomberg pitches Pakistan’s one year probability of default at a low of 10% as opposed to a highly dubious number of 93% circulated by an unscrupulous local political leader a few days ago,” he said while referring to the claims of PTI Chairman Imran Khan.
“Pakistan will InshaAllah continue to honour its all financial commitments on time!”
A section of global and local experts and bond investors saw the rise in the CDS as a threat to their receivables.
Yields (rate of return) on the $1 billion international bond (Sukuk), which is maturing on December 5, 2022, soared to 120% on Monday from around 96% on Friday, indicating the investors’ lack of confidence in Pakistan whether it would be able to repay the maturing debt.
Earlier today, State Bank of Pakistan (SBP) Governor Jameel Ahmad told a briefing that Pakistan will repay a $1 billion international bond on December 2, three days before its due date.
There has been growing uncertainty about the ability of Pakistan to meet external financing obligations with the country in the midst of an economic crisis and recovering from devastating floods that killed over 1,700 people.
The bond repayment, which matures on December 5, totals $1.08 billion, the SBP chief told a briefing, according to two analysts who were present.
