KARACHI: Foreign investors have significantly increased their exposure to Pakistan’s domestic government securities, investing around $275 million in Treasury Bills (T-bills) and Pakistan Investment Bonds (PIBs) during the first 70 days of the current fiscal year 2026-27, according to the latest data released by the State Bank of Pakistan (SBP).
The inflows mark a notable change in foreign investor activity, particularly because a substantial portion of the investment has shifted towards longer-term PIBs, which had attracted limited foreign interest over the previous two years.
According to SBP data covering July 1 to September 11, 2026, foreign investors invested $151.4 million in Treasury Bills and $123.7 million in PIBs, taking total investment in domestic government bonds to approximately $275 million.
The most notable feature of the latest inflows is the strong revival of foreign demand for PIBs.
During the first 11 days of September alone, foreign investors placed approximately $49.7 million in PIBs, compared with only $12 million in Treasury Bills. This represents a significant change from the pattern seen earlier in the fiscal year, when foreign participation was concentrated largely in short-term T-bills.
The development is noteworthy because foreign investors have generally preferred shorter-duration Pakistani government securities, allowing them to capture relatively high yields while retaining greater flexibility to exit.
The renewed interest in PIBs suggests that some international investors are now willing to take greater duration exposure to Pakistan’s fixed-income market.
The United Arab Emirates has emerged as the largest source of foreign investment in Pakistan’s government bonds during the period.
The UAE accounted for approximately $100 million of the total inflows, including around $90 million in PIBs and $10 million in T-bills. Luxembourg was another significant investor, contributing around $44.4 million, while the United Kingdom invested approximately $60.7 million and the United States around $31.6 million, according to reported SBP data.
The composition of these inflows is important because the UAE’s investment has been heavily concentrated in PIBs, reinforcing the evidence of renewed foreign appetite for longer-term Pakistani government securities.
One of the major factors supporting foreign demand is the relatively attractive yield available on Pakistani government securities.
The SBP currently maintains its policy rate at 11.5%, while government bond yields remain around the 12% level. The combination of relatively high domestic yields and expectations surrounding Pakistan’s monetary and macroeconomic outlook has helped make local-currency government securities attractive to foreign investors seeking higher returns.
Recent PIB auctions also demonstrate that yields remain relatively elevated. In the September 18 auction, the government raised Rs181 billion against a target of Rs250 billion. The cut-off yield was 12.49% for three-year PIBs, 12.49% for five-year PIBs and 12.50% for 10-year PIBs.
For international investors, these yields can provide an attractive return provided that the Pakistani rupee remains relatively stable and the investor is comfortable with Pakistan’s sovereign and market risks.
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