S&P rates Pakistan bond B+

Standard & Poor's said it assigned its B+ senior unsecured foreign-currency debt rating to the Islamic Republic of Pakistan's (foreign-currency B+/positive/B; local-currency BB/positive/B) proposed global bond issue of up to $1 billion. The proposed issue will consist of a new 10-year bond maturing in 2017, and the reopening of the existing bond maturing in 2036. The B+ rating on the existing bond also is affirmed.

The sovereign ratings reflect strong economic growth that is supported by a consistent and reform-oriented policy environment, balanced against prevailing high public debt and low fiscal flexibility, S&P said.

The ratings remain constrained, however, by a high level of public and external leverage, the agency said, and fiscal inflexibility owing to an exceedingly narrow tax base.

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