11 July 2017: Moody’s affirmed the Government of Pakistan’s B3 issuer and senior unsecured ratings, and maintained a stable outlook, according to Reuters.
The decision to affirm the rating ‘balances credit-supportive and -constraining factors,’ the report said.
The investors’ service firm stated that the country’s medium-term growth outlook is ‘strong, supported by the China-Pakistan Economic Corridor (CPEC) project to address critical infrastructure constraints, and the continuing effects of macro-stability-enhancing reforms started under the IMF’s Extended Fund Facility (EFF) program in 2013-16.’
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The research report, however, pointed out that the government’s borrowing burden remained high and fiscal deficits were relatively wide, primarily driven by a ‘narrow revenue base that restricts development spending.’
Pakistan’s foreign exchange reserve adequacy was reported stronger as compared to the past few years; however, the firm said it was still vulnerable to an increase in imports.
Domestic politics and geopolitical risk were cited as two significant factors that continue to represent a significant constraint on the country’s rating.
According to the rating report, the decision to maintain a stable outlook on Pakistan’s B3 rating reflects ‘broadly balanced risks related to these two sets of factors.’
Moody’s has affirmed the B3 foreign currency senior unsecured ratings for The Second Pakistan Int’l Sukuk Co. Ltd and The Third Pakistan International Sukuk Co Ltd.
Pakistan’s Ba3 local currency bond and deposit ceilings remain unchanged.
The B2 foreign currency bond ceiling and the Caa1 foreign currency deposit ceiling are also unchanged. These ceilings act as a cap on the ratings that can be assigned to the obligations of other entities domiciled in the country. – Source: Geo
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17 June 2016: After the six-monthly review, Moody’s Investors Service today maintained Pakistan’s rating at B3 with stable outlook.
11 June 2015: Moody’s today further improved Pakistan’s bond rating to B3 from Caa1, and assigned a stable outlook.
The key drivers for the rating action are expectations of:
1. Continued strengthening of the external payments position; and
2. Sustained progress in structural reforms under the government’s program with the IMF.
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Earlier story: Moody’s upgraded Pakistan’s dollar bonds rating one notch from stable to positive on Wednesday on the back of the country’s improving macroeconomic indicators.
The financial ratings firm said its decision came in view of Pakistan’s strengthening foreign exchange reserves.
PM Sharif has congratulated his fiscal team and Pakistan after Moody’s Pakistan Caa1 rating and changed the outlook to positive showing economic progress.
Pakistan has been trying to boost its flagging economy since Prime Minister Nawaz Sharif was elected nearly two years ago.
“Moody’s has revised the outlook on Pakistan’s foreign currency government bond rating to positive from stable,” the company said in a statement.
Pakistan issued $1 billion in five-year Sukuk Bonds, the Islamic version of eurobonds, in November last year to boost foreign exchange reserves.
In April 2014, the country issued $2 billion worth of eurobonds, in five and 10 year terms.
Pakistan’s net foreign currency reserves with the central State Bank reached to $11.2 billion up to March 13, from just $3.2 billion in January 2014.
The IMF has voiced satisfaction with Pakistan’s progress on reforms required under a $6.6-billion bailout agreed in 2013.
The loan came on condition that Pakistan — which was suffering an energy crisis — would carry out extensive economic reforms, particularly in the energy and taxation sectors.
Moody’s said continued success under the IMF programme would act as “upward triggers to the rating”.
The State Bank of Pakistan on the weekend slashed its benchmark interest rates by half a percentage point to eight percent.
Source: Express Tribune
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