Pakistan’s dollar-denominated bonds fell by as much as 2 cents on Friday after Pakistan bombed major cities in Afghanistan overnight, according to Tradeweb data.
Egyptian and Jordanian bonds are also under downward pressure amid geopolitical turmoil.
Pakistan’s 2051 maturity fell the most, dropping just over 2 cents to be bid at a one-month low of 98.76 cents.
The attack was the first time Pakistan has directly targeted a former ally, and described the situation as an “open war.”
“The timing of the recent strikes is particularly unfavorable, as IMF staff are currently in Pakistan for third round of review negotiations, which are expected to make the next round of funding available,” said Karrie Davies, senior emerging markets economist at Oxford Economics.
Rising geopolitical risks could indirectly increase pressure on Pakistan’s fiscal and external balance of payments, Davis said.
Some Egyptian sovereign bonds also fell by about 1 cent, hitting a one-month low, while Jordan’s bonds due in 2047 also fell by about 1 cent.
Tensions in the Middle East are rising after the United States and Iran concluded talks in Geneva with no sign of a breakthrough. US President Donald Trump has ordered a military buildup in the region.
(Reporting by Libby George; Editing by Amanda Cooper)
