Sovereign credit ratings on Pakistan affirmed at ‘B-‘, outlook stable

LONDON, Nov 15 (APP)- Standard & Poor’s Ratings Services has affirmed its ‘B-‘ long-term and ‘C’ short-term sovereign credit rating on Pakistan saying that the outlook on the long-term rating is stable, according to the company’s announcement on Monday.It also affirmed its ‘B-‘ issue rating on Pakistan’s senior unsecured local-currency debt and the transfer and convertibility (T&C) rating of ‘B-‘.Likewise, S & P affirmed the ‘B-‘ issue rating on the sovereign’s senior unsecured foreign-currency debt, as well as its recovery rating of 3, which denotes its expectation of a meaningful recovery of 60%-70% in the event of a distressed debt exchange or payment default.

“The ratings affirmation takes into account Pakistan’s improved external liquidity position, which was largely due to the International Monetary Fund (IMF) standby loan agreement and other bilateral and multilateral support,” said Standard & Poor’s credit analyst Agost Benard.
“This credit strength is weighed against the sovereign’s high public and external leverage, political and security risks, and fiscal inflexibility due to an exceedingly narrow tax base,” he said.
The company also noted that it could lower the ratings if major slippages in policy occur, resulting in renewed balance of payments difficulties or rising public debt trajectory.
“Conversely, we could raise the ratings if Pakistan is able to sustain its macroeconomic stabilization program and fiscal consolidation efforts—indicated by moderating fiscal deficit and a steady reduction in public debt,” added Benard – APP