Pakistani Bonds Surge Alongside PSX As Yields Drop Up to 1,000 Basis Points

Pakistan’s bond market has been rallying alongside the Pakistan Stock Exchange where equities have surged by 80 percent over the past year. “Pakistan Investment Bonds (PIBs) have delivered annual gains of up to 40%, driven by faster-than-expected decline in inflation and signs of economic stability. Yields are down 400 to 1000 basis points in one year,” CEO Topline Securities Mohammed Sohail said in a statement. In October 2023, the yield on the 1-year bond was 23 percent, while the 3-year, 5-year, and 10-year bonds offered 19 percent, 17 percent, and 16 percent, respectively. Today, these yields have sharply declined to 13 percent for the 1-year bond, and 12 percent for the 3-year, 5-year, and 10-year bonds, each. Pakistan’s dollar-denominated Eurobonds have also shown a big improvement. Yields have fallen from 20-40 percent last year to around 9-11 percent today. This sharp decline in yields could open the door for the government to tap into commercial borrowing from international markets under more favorable terms, Sohail added.