International investment bank Barclays has upgraded Pakistan’s sovereign dollar bonds to an “overweight” rating, signalling growing confidence in the country’s economic outlook after concerns over global oil prices eased.
The upgrade comes just a month after Barclays had taken a more cautious stance on Pakistan’s debt. The latest assessment was highlighted in a Bloomberg report and later shared by Finance Minister’s adviser Khurram Schehzad on X.
An “overweight” rating suggests analysts expect an investment to deliver stronger returns than the broader market over the next 12 months. It represents a more positive view than an “equal weight” rating, which indicates expected performance in line with the market, while an “underweight” rating points to weaker expected returns.
Stronger external position supports outlook
According to Bloomberg, Barclays analysts said Pakistan’s external position has shown notable resilience, helping support a more favourable view of the country’s debt.
The bank pointed to several factors behind its improved outlook, including a healthier fiscal position, stronger external buffers, stable foreign exchange reserves and a relatively balanced growth and inflation environment.
Barclays also noted that financial support from international lenders and partner countries remains available. The bank said Pakistan’s strategic importance to both Central Asia and the Middle East continues to provide an additional layer of support for the economy.
As part of its recommendations, Barclays advised investors to buy Pakistan’s sovereign dollar bonds maturing in 2031, 2036 and 2051. It also backed the 2031 dollar bond issued by the Water and Power Development Authority (Wapda) and recommended selling Pakistan’s five-year credit default swap.
Rating upgrades expected in 2026
While major credit rating agencies have yet to announce further upgrades, Barclays believes positive revisions could arrive later this year.
According to the Bloomberg report, the bank expects rating agencies to reassess Pakistan’s credit profile during the second half of 2026 and potentially deliver favourable outcomes.
Reacting to the development, Schehzad said the upgrade reflects growing recognition of Pakistan’s improving economic fundamentals among global investors and financial markets.
Pakistan has already seen encouraging signals from international rating agencies over the past year. In April, Fitch Ratings reaffirmed Pakistan’s long-term foreign currency issuer default rating at B- with a stable outlook.
Earlier, Moody’s Ratings raised Pakistan’s credit rating by one notch to Caa1 from Caa2 and revised its outlook to stable, citing a stronger external position and progress under the IMF programme. Meanwhile, S&P Global Ratings upgraded Pakistan’s sovereign rating to B- from CCC+ and assigned a stable outlook.
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