Pakistan’s Dollar Bond Rally Anticipated to Continue in 2024 Amidst Positive IMF Outlook

Expectations are high that Pakistan's dollar bonds will experience a second consecutive year of rallying, fueled by the government's anticipated securing of another bailout from the International Monetary Fund (IMF), as reported by Bloomberg.

UBS Asset Management and William Blair Investment Management remain optimistic about the attractiveness of these bonds, having witnessed a near doubling in value throughout 2023. Independent wealth manager Sideman Rafiq Maniya from Karachi suggests potential gains of up to 37% within the next 18 months.

Pakistan managed to avert a sovereign default by securing a substantial $3 billion bailout from the IMF in July, a move that propelled the nation's bonds to top-performing status globally in the past year. While the pace of gains is expected to moderate, ongoing reforms, including adjustments to fuel and electricity prices, could pave the way for additional financial support.

"Their commitment to the IMF program is significant, indicating a high likelihood of securing another bailout," noted Johnny Chen, fund manager at William Blair in Singapore. Chen also emphasized the potential for reforms gaining momentum post-elections.