NA member questions process behind $750m Eurobond borrowing

ISLAMABAD: A National Assembly member has sought details of how the federal government arranged $750 million through a private placement against Eurobonds, questioning whether the borrowing and related mandates were handled through an open and competitive process.

Aliya Kamran of the Jamiat-e-Ulema Islam-F raised the matter in questions submitted to the lower house in June. Speaking after being contacted, she confirmed that she had filed the questions and said the matter had been admitted for a reply in the National Assembly.

Kamran asked whether any tender notice, request for proposals, bid evaluation or contract award details were publicly issued for three transactions: a $1 billion commercial borrowing, the $750 million Eurobond placement and $250 million in Panda Bonds. She also asked whether mandates for the $1 billion syndicated term finance facility of June 2025, the $750 million Eurobond placement of April 2026 and the $250 million Panda Bonds of May 2026 were given to Habib Bank Limited and Standard Chartered Bank Limited without an open competitive process under the Public Procurement Regulatory Authority rules of 2024.

She further sought information about fees, commissions and underwriting charges paid in connection with the three transactions, and asked whether the government would order an independent inquiry into alleged PPRA violations and determine responsibility for any mis-procurement that may have caused a loss to the national exchequer.

Borrowing terms and competing offer

The government borrowed $750 million for three years at about 7% interest through a private placement. Finance ministry officials had said after the deal that the amount was raised in April through Standard Chartered Bank without competitive bidding, at an interest rate of 6.98% for three years.

The same details show Citibank had offered financing of $800 million to $1 billion for a minimum of five years at 7.25% interest. It had also proposed six-year financing at 7.37% to 7.5% and seven-year financing at 7.5% to 7.6%.

A senior Finance Ministry official, when contacted late last month, said the ministry had opted for the lower interest cost rather than a longer maturity period. The ministry's spokesperson did not officially comment on the Citibank offer.

Procurement rules in focus

Sources maintained that the federal government can raise commercial debt without competitive bidding, but added that at the time the $750 million was arranged there was no such exemption for Eurobond borrowing. In 2014, the federal government exempted commercial borrowings from the competitive bidding requirements under the PPRA framework. However, loans raised publicly, especially Eurobonds, had not been excluded from competitive procedures.

The earlier exemption was taken on the grounds that public advertisements could create market panic and lead to speculation, with the justification linked to economic stability and national security, except in the case of Eurobonds. The recent borrowings were obtained for budgetary support and balance of payments needs.

Transparency International-Pakistan said last month that no public record of tender notices, requests for proposals, bid evaluations or contract awards for the $750 million transaction was available, and said that if this was correct it would amount to a breach of PPRA rules requiring transparency and competitive procurement.

The report also noted that HBL had previously clarified it did not receive any fee for the Panda Bond transaction.

Debt position

The questioning over the borrowing process comes as Pakistan's public debt continues to rise. According to the State Bank of Pakistan's latest debt bulletin, the federal government's total debt, excluding liabilities and debt owed to the International Monetary Fund, increased by Rs5.9 trillion during July-May of fiscal year 2025-26, taking the stock to Rs82 trillion by the end of May.

There is currently no permanent director general of the debt office, and added that despite repeated commitments to the IMF and the World Bank, the country's Debt Management Office is operating below full capacity.