Pakistan’s Default Risk Plummets as CDS Spread Falls 93%

Spread on Pakistan’s CDS (Credit Default Swap) – insurance against credit default risk, has fallen to a low of 505 bps (5.05%) – even lower than some of the emerging and frontier markets, making a remarkable recovery of over 11,883 bps (11.89%). Pakistan’s 5-year CDS spread has dropped from 12,388 bps in Nov 2022, indicating a significant reduction in default risk. Improved debt management, boosted foreign reserves, and fiscal discipline have restored market confidence in Pakistan’s ability to meet its sovereign obligations. As investor confidence soars, Pakistan’s global bonds have been rallying, making creditors increasingly optimistic about Pakistan’s financial health. Mr. Khurram Schehzad, Advisor to Finance Minister has said: With its improved credit profile and favorable market conditions, Pakistan is now well-positioned to capitalize on this opportunity and attract credit and investment flows.