Karachi (Web Desk): Pakistan has successfully made a repayment of $1 billion against a matured international Sukuk (Shariah-compliant bond) three days ahead of schedule on Friday.
“Yes, Pakistan have made the payment of $1 billion,” confirmed the State Bank of Pakistan (SBP) Spokesperson. The bank has made the payment to Citigroup which would transfer the funds onward to the investors.
Earlier, the risk of default – measured through a 5-year credit default swap (CDS) – hit a record high of 123% last month, building strongly on the perception that the country would fail to arrange the payment amid its low foreign exchange reserves.
CDS is an insurance derivative that covers the risk of default on the repayment. Experts, however, said this was an ill-liquid and low-volume traded derivative. A little trade in CDS had built a wrong perception of default on the repayment.
The bond repayment, which matures on Dec 5, totals $1.08billion n, the central bank chief said last week.
During the week ended Nov 25, SBP reserves stood at $7,498.7 million. It has since received $500m from the Asian Infrastructure Investment Bank.