The federal cabinet in its meeting has given approval to Water and Power Development Authority (Wapda) to issue Eurobonds in the international market for raise up to $500 million for meeting funding requirement of Mohmand and Diamer-Bhasha dam projects.
As per local news outlets, approval is subject to necessary modalities for finalization of the security structure in consultation with the State Bank of Pakistan and Finance Division of the Government.
Total Foreign funding requirement of Wapda to construct the two dam projects is estimated at $2.025. WAPDA has planned to arrange foreign funding through friendly countries, syndicate loans, and Eurobonds.
Wapda has also approached the Asian Infrastructure Investment Bank and Countries in the Middle East via the Economic Affairs Division (EAD) to access concessional financing on competitive terms. However, no decision has yet been concluded.
Wapda has highlighted that Syndicate Loans available are for maximum two years whereas a construction period of two dams stretched to up to seven years period. Hence, Eurobonds, having a maturity of 7-10 years are best suited for WAPDA.
Wapda currently requires Letter of Comfort from Finance Division for its credit rating process, as investors heavily rely on the assessment of the rating agencies in gauging the creditworthiness of the issuer. Currently WAPDA has been assigned a Long-tern Foreign and Local-Currency Issuer Default Rating of “B” with a stable outlook by credit rating agencies including Fitch, S&P, and Moody’s.
This has enabled the Authority to secure financing at the most favorable terms as Wapda’s credit rating was now equal to the government of Pakistan’s rating and therefore it could raise funds without government guarantee in the international market.
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