The Pakistan Stock Exchange (PSX) opened higher on Thursday, with the benchmark KSE-100 index climbing 792.31 points, or 0.54%, to 147,321.61 in early trade. The rebound comes after a bearish previous session in which the index lost 476 points, closing at 146,529.30.
Investor sentiment surged following Moody’s Ratings’ decision to upgrade Pakistan’s local and foreign currency issuer and senior unsecured debt ratings from Caa2 to Caa1, while also improving the senior unsecured Medium-Term Note (MTN) programme rating. The outlook for all ratings was revised from “positive” to “stable.”
Moody’s attributed the move to Pakistan’s strengthening external position and progress on reforms under the IMF’s Extended Fund Facility (EFF). The upgrade mirrors similar recent actions by Fitch Ratings and S&P Global, signaling growing confidence in Pakistan’s economic trajectory.
According to Moody’s, foreign exchange reserves are expected to improve, though the country will remain dependent on timely support from international partners. Fiscal recovery is underway, driven by an expanded tax base, while debt affordability has improved — albeit still ranking among the weakest globally.
The agency warned that governance challenges and high political uncertainty continue to weigh on the outlook. Positively, faster-than-expected gains in debt servicing capacity and external account stability could further strengthen the economy; however, delays in critical reforms risk reversing progress.
The Caa1 rating also applies to foreign currency debt issued under the Pakistan Global Sukuk Programme Co Ltd, which Moody’s views as a direct obligation of the government. The outlook for this programme has likewise shifted from “positive” to “stable.”
