KARACHI: Pakistan is likely to sell a $500 million 10-year green bond in the international market on Friday (tomorrow) at an estimated yield of 7-8 per cent, said Topline Brokerage CEO Mohammad Sohail on Thursday.
The Water and Power Development Authority (Wapda) has planned to sell these bonds in the international market in line with the environmentally-friendly debt — green debt — over the next two years, Muzammil Hussain, chairman of the state-owned organisation told Bloomberg a few days back.
The nation aims to tap soaring investor demand globally for green debt as it pushes forward with plans to increase renewable and hydroelectric generation to 60 per cent by 2030, he had said. Pakistan is targeting economic growth of above 5pc in the next year from around 3.9pc this fiscal year with the help of spending on large infrastructure projects.
The funds from the proposed dollar bond will be used to fund the Diamer-Bhasha and Mohmand dams in the country, according to Wapda. Earlier, Pakistan sold $2.5 billion of Euro bonds in March, the first since 2017, in a sign of investor demand for debt from the nation.
Fitch Ratings affirmed its B- ratings for Wapda, the same rating as the sovereign earlier this year.
“The government currently provides a large share of financing for power-related CAPEX, but the policy direction for Wapda is to expand its own indebtedness without the government’s commitment,” Fitch said at the time. “The government owns 100pc of Wapda and has a tight grip on its overall operation, including financing.”
Meanwhile, the government of Pakistan has already allowed Wapda to raise money. It had selected JP Morgan to lead a consortium of three global leading banks that will assist in floating $500 million Eurobonds in the global market for two mega-dams in Pakistan.
This consortium includes JP Morgan as global coordinator to market issuance of Eurobond. This is the biggest international bank with an unmatched experience of issuing bond. Other international banks include Standard Chartered and Deutsche Bank.
Subsequently, this consortium of international banks would help market issuance of bonds and minimise the global market risk.