(Bloomberg) -- Fitch Ratings raised Pakistan’s credit rating, citing reduced risks from external funding after it secured a new bailout from the International Monetary Fund.
It upgraded Pakistan to CCC+ from CCC, suggesting while the nation remains below investment grade, there is a lower chance of a default now.
“The upgrade reflects greater certainty over continued availability of external funding,” Krisjanis Krustins, an analyst at the rating company wrote in a note. The previous IMF bailout “helped the country narrow fiscal deficits and rebuild foreign exchange reserves, and further improvements are likely.”
Pakistan is expecting final approval from the IMF for a new $7 billion loan deal by August-end. Support from creditor nations including China, Saudia Arabia, and the UAE has also helped in managing the nation’s foreign debt obligations as its coalition government implements tough reforms such as widening the tax net and cutting spending on energy subsidies.
External public debt maturities this fiscal year stand at $22 billion, about $13 billion of which is bilateral lending that is typically rolled over, the note said. The central bank is also gradually rebuilding reserves, helped by limited current-account deficits and investment inflows, according to Fitch.
Dollar bonds rose, with notes maturing 2026, 2031, and 2029 all up at least half a cent. The 2031 bond advanced to 79.7 cents on the dollar, according to indicative pricing compiled by Bloomberg.
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