S&P rates Pakistan notes B+

Standard & Poor's said it assigned a B+ senior unsecured foreign currency debt rating to the Islamic Republic of Pakistan's (B+/positive/B) proposed global bond issue of up to $1 billion. The proposed bond will have a maturity of seven to 10 years.

S&P said the ratings reflect Pakistan's strong economic growth, which is supported by a consistent and reform-oriented policy environment. Structural improvements, together with sharp declines in the government's external debt indicators, help Pakistan's overall growth prospects.

The ratings on Pakistan are constrained by the apparent lack of robustness of its fiscal and monetary stance in the face of ongoing inflationary pressures, high public debt and low fiscal flexibility, the agency said. Unless the government takes additional steps to boost revenue or cut expenditure, Pakistan's general government fiscal deficit is likely to rise above 4% of GDP in the fiscal year ending June 30, S&P predicted.

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