Govt launches 15-year bond; raises over Rs1.2tr in auction

ISLAMABAD: In a major milestone for Pakistan’s debt market, the Ministry of Finance on Wednesday announced the successful launch of the country’s first 15-year Zero Coupon Bond, raising over Rs47 billion as part of a record Rs1.2 trillion raised through a major auction of government bonds held earlier in the day.

According to the finance ministry, this new bond does not pay interest every year. Instead, investors receive a lump sum at the end of 15 years. “This helps the government reduce short-term repayments and plan finances better.”

The strong investor response, the ministry said, is a reflection of growing market confidence in Pakistan’s economic trajectory and recent financial reforms.

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“This is a major step forward in making Pakistan’s financial system stronger and more resilient,” said Finance Minister Senator Muhammad Aurangzeb. “We are introducing new, smart ways of borrowing that reduce risk and give investors more options. Our aim is to manage public debt responsibly, promote Islamic finance, and attract more long-term investment to support the country’s economic growth.”

The successful auction comes as part of a broader strategy to lengthen the maturity profile of public debt and shift reliance away from short-term borrowing. The average maturity of Pakistan’s domestic debt has now increased from 2.7 years to 3.75 years, easing refinancing pressures.

The ministry also noted a shift in the investor base, with growing participation from pension funds and insurance companies, moving beyond traditional bank-dominated demand. This diversification is seen as critical for deepening Pakistan’s local debt market and spreading financial risk.

The auction also witnessed declining yields across other government bonds, a signal of improved sentiment among investors amid expectations of easing inflation and lower interest rates in the months ahead.

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The finance ministry said it is also working on more products to allow ordinary citizens to invest in government bonds, especially Islamic ones, to encourage savings and financial inclusion.

The ministry said despite ongoing global economic uncertainties, Wednesday’s auction results were hailed as a vote of confidence in Pakistan’s macroeconomic direction, with the government positioning long-term bonds as a tool to both stabilise public finances and strengthen the domestic capital market.