Hong Kong February 21 2024: Barclays retains its overweight rating on Pakistan, and suggests buying on weakness as the new government is unlikely to opt to default on its eurobonds.
“Political noise will likely linger even after national assembly convenes, but repayment risks are unlikely to rise given improved foreign reserves,” Avanti Save, a credit strategist in Singapore, wrote in a note.
For a Sharif-led government, we would expect the initial 12 months after elections to be less disruptive. On the other hand, a PTI-backed government would likely prioritize its political agenda over economic issues, in our view.
“This could delay or slow IMF talks. That said, we do not expect the government to halt payments on its eurobonds”.
The bonds will also react negatively if election results are dismissed, but stabilize if a caretaker government is installed.
