Barclays upgrades Pakistan's sovereign debt to 'overweight' on improved oil market outlook

British financial institution Barclays has upgraded Pakistan's dollar bonds to an 'overweight' rating, a significant shift from its previous assessment. This upgrade, reported on Wednesday, is attributed to improved prospects in the oil market and the overall resilience of Pakistan's external economic position.

“

The resilience of Pakistan’s external position cannot be ignored and it underpins the more optimistic view.

The 'overweight' rating signifies that Barclays analysts expect Pakistan's bonds to outperform the broader industry universe over the next 12 months. This optimistic view is supported by the country's demonstrated economic stability, including a strengthened fiscal position, steady foreign reserves, and a moderate outlook for growth and inflation. Furthermore, the report notes that multilateral and bilateral financing remains secure, partly due to Pakistan's strategic geopolitical importance in Central Asia and the Middle East.

“

While credit rating upgrades have taken longer to materialise, we think agencies will look to review and conclude positively on ratings in [the second half of] 2026.

While credit rating upgrades from agencies have been slower to materialize, Barclays anticipates a positive review from rating agencies in the latter half of 2026. This sentiment is echoed by Khurram Schehzad, advisor to Pakistan's finance minister, who stated that investors and global capital markets are increasingly recognizing Pakistan's improving fundamentals. Other major rating agencies like Fitch, Moody's, and S&P Global have also recently affirmed or upgraded Pakistan's credit ratings with stable outlooks, reflecting a cautiously optimistic trend in the country's financial standing.

“

Pakistan’s improving fundamentals are increasingly being recognised by investors and global capital markets.