LONDON: Pakistan sovereign dollar bonds recorded significantly negative movement on Monday with heightened geopolitical tension creeping in with India, said Tradeweb data.
Bonds maturing in 2031 lost the highest hit, dropping 3.5 cents at 78.75 cents from 82.25 cents. The fear now mounts of war as the Defence Minister says that India looked “imminent” concerning military incursion.
Bond prices tumble on such news, indicating the intensifying investor concerns following the Indian-held Kashmir attack last week, igniting an already fragile relationship between the two nuclear neighbors. The markets have immediately responded to increased uncertainty by pushing Pakistan's foreign debt for sale.
Such news can prove adverse for Pakistan's financial markets, hunting for loans and investments to sustain the waning economy. Just weeks previously, Pakistan sovereign bonds were on a great gaining streak, following political peace being restored following a coalition agreement. Renewed tension on the frontiers has promptly undone all the achievements, putting in bold relief how susceptible investor confidence seems to be to regional instability.
Analysts say that in case the situation escalates further — either militarily or politically — bond yields might shoot up, thereby complicating Pakistan's external finance plans. Thus, investors are now intently watching diplomatic moves, and with no poor attempts at de-escalation has spread only more fears among the markets.
With fears of impending regional conflict, Pakistan's economic direction may find feet in hurdles, especially in case higher foreign borrowing costs come and currency pressure resumes-while, for now, the bond market reflects escalating uncertainty and a high-stakes power play of regional geopolitics.
[Source Credit: Business Recorder]
