LONDON: Barclays has maintained its overweight rating on Pakistan as the new government is unlikely to default on its Eurobonds.
In a note, Barclays underlined the improved foreign reserves of Pakistan and assessed the risk of repayment as low, despite the country’s efforts to get a new loan from the International Monetary Fund (IMF).
A credit strategist at Barclays in Singapore stressed that while political noise may persist, the risk of repayment is unlikely to increase because of the improved foreign reserves.
The analyst said for Shehbaz Sharif-led government, the agency expects the initial twelve months after polls to be less disruptive.
On the other side, a Pakistan Tehreek-e-Insaf (PTI)-backed government would possibly prioritize its political agenda over economic problems, according to media reports.
Barclays expresses confidence
Barclays showed confidence that the Pakistani government will continue to meet its obligations on Eurobonds, although it warned that bonds will react negatively if poll results are dismissed but stabilize if a caretaker government is installed.
