Pakistan’s foreign exchange reserves fell by $366mn to $9.72bn for the week ended May 27, the central bank said. Bloomberg notes that its forex reserves have dipped over 50% in almost a year and is sufficient to only pay for less than two months of imports. Default fears have risen with the nation’s current state of finances with its 5Y CDS spread jumping to over 1400bp from 400bp at the start of the year. Pakistan’s finance minister Miftah Ismail said on that some Chinese banks have agreed to refinance the country with RMB 15bn ($2.3bn) in funds to “shore up foreign exchange reserves”. Pakistan’s trade deficit is set to widen to a record $45bn in the year ending June, as per Bloomberg. Moody’s has also cut Pakistan’s outlook to negative from stable citing “heightened external vulnerability risk and uncertainty around the sovereign’s ability to secure additional external financing to meet its needs”.

Pakistan’s dollar bonds were trading lower with its 8.875% 2051s down 0.7 points to 61.75 cents on the dollar.

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