Web Desk (MNN); Pakistan’s dollar bonds are on track to extend their strong gains, emerging as Asia’s best-performing debt this year, Bloomberg reported. The rally has been fuelled by back-to-back sovereign rating upgrades, improved reform progress, and Islamabad’s plan to re-enter global debt markets.
The government is preparing to issue yuan-denominated bonds later this year, and is expected to return to the Eurobond market in 2026 — its first such issuance in nearly five years. Analysts from Goldman Sachs Asset Management and UBS Asset Management say these moves could further boost Pakistan’s bond performance.
The new issuances reflect Pakistan’s effort to diversify its financing channels and reduce dependence on the International Monetary Fund. So far in 2025, Pakistan’s dollar bonds have returned 24.5 percent, the highest in Asia.
Danske Bank Asset Management, which began buying Pakistani bonds during the peak of the country’s financial turmoil two years ago, has raised its exposure multiple times since then. Soren Morch, head of emerging markets debt, said the firm expects Pakistan to remain on its reform path, rebuild foreign exchange reserves, regain market access and benefit from strengthening macroeconomic buffers.
Both S&P Global Ratings and Fitch Ratings upgraded Pakistan’s sovereign rating this year, citing improved fiscal discipline and reform momentum under Prime Minister Shehbaz Sharif’s IMF-supported programmes. Islamabad has secured billions in IMF financing after raising taxes and maintaining tight fiscal policies.
According to Shamaila Khan of UBS Asset Management, Pakistan’s bond outperformance should continue as long as the government adheres to IMF commitments. She added that renewed access to international markets will ease refinancing concerns for the next several years.
However, geopolitical risks persist. Tensions with India and Afghanistan, along with the possibility of rising global energy prices, could strain public finances, especially as oil makes up around 30 percent of Pakistan’s imports.
Despite these risks, investor sentiment remains upbeat. Salman Niaz of Goldman Sachs Asset Management said Pakistan could see further capital gains over the next six to twelve months, with credit rating upgrades and renewed market access serving as key catalysts.
