Islamabad: Advisor to Finance Minister, Khurram Shehzad on Wednesday said the decline in country risk premiums provides a timely opportunity for Pakistan to plan and re-enter global capital markets, particularly with global interest rates on the decline.
The advisor said that lower borrowing costs and increased liquidity would help alleviate external pressures further, thereby strengthening Pakistan’s external position and boosting its economic prospects, said a press release issued here.
From High-Risk to High-Prospect: Pakistan’s Default Risk plummets as Credit Default Swap (CDS) Spread falls 93 percent amidst improved economic outlook, he said.
Shehzad said that spread on Pakistan’s CDS- insurance against credit default risk, has fallen to a low of 505 bps (5.05 percent) – even lower than some of the emerging and frontier markets, making a remarkable recovery of over 11,883 bps (11.89 percent).
He said that Pakistan’s five-year CDS spread has dropped from 12,388 bps in Nov 2022, indicating a significa
nt reduction in default risk.
Improved debt management, boosted foreign reserves, and fiscal discipline have restored market confidence in Pakistan’s ability to meet its sovereign obligations, he said.
The advisor said that as investor confidence soars, Pakistan’s global bonds have been rallying, making creditors increasingly optimistic about Pakistan’s financial health.
He said that with its improved credit profile and favorable market conditions, Pakistan is now well-positioned to capitalize on this opportunity and attract credit and investment flows.