Pakistan Secures $300Mn Loan Through UBL At 7.2%-7.7% Interest
Date
12/21/2024 3:10:14 PM
(MENAFN- AzerNews)
Pakistan has acquired a $300 million commercial loan at interest
rates ranging from 7.2% to 7.7%, to address its external financing
requirements under the International Monetary Fund (IMF) programme,
Azernews reports, citing Pakistan Today.
The loan includes $250 million at a rate of one-year Secured
Overnight Financing Rate (SOFR) plus a 3% margin, equivalent to
roughly 7.2%. The remaining $50 million was obtained at one-year
SOFR plus a 3.5% margin, translating to 7.7%. Both portions are
repayable within one year.
The loan was secured from United bank Limited (UBL), which
arranged the facility through Gulf-based lenders.
This marks the first foreign source-based loan outside China
since fiscal year 2022, as Gulf and European banks had earlier
withdrawn facilities due to Pakistan's deteriorating credit rating
and financial challenges.
This is the second foreign commercial loan acquired in three
months. In September, the government obtained a $200 million loan
from the Bank of China at an interest rate of approximately 8.5%.
The finance ministry shared with the Senate Standing Committee on
Finance that this loan was based on a three-month SOFR plus a 3.15%
margin.
Senior government officials confirmed that an additional $100
million facility might also be arranged through UBL.
This development could pave the way for more foreign commercial
financing, as international banks were previously hesitant to lend
due to low ratings.
Earlier this year, Pakistan negotiated a $600 million loan with
Standard Chartered Bank at an interest rate of around 11% but later
opted not to proceed with the facility.
The IMF has identified a $2.5 billion external financing gap for
the current fiscal year, which Pakistan is working to close through
various measures. However, the government has yet to secure a $1.2
billion deferred oil payment facility from Saudi Arabia.
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