S&P Global raised Pakistan's sovereign credit rating to 'B-' from 'CCC+' and placed it on a 'stable' outlook on Thursday, saying the country's finances and reserves had been stabilised by International Monetary Fund support.

"The stable outlook reflects our expectations that continued economic recovery and government efforts to enhance revenue will stabilize fiscal and debt metrics," ratings agency S&P said in a statement on the move.

"We also expect that sustained official financing will support Pakistan in meeting its external obligations, and that the country will continue to roll over its commercial credit lines over the next 12 months."

Pakistan's longer-dated international bonds rallied after the upgrade, with the 2051 maturity gaining 1.6 cents to be bid at 84.85 cents on the dollar, according to Tradeweb data.

The 2031 and 2036 maturities also gained around 1 cents, while shorted-dated maturities posted smaller gains.

Prime Minister Shehbaz Sharif expressed satisfaction over the improvement in Pakistan’s credit rating by S&P Global Ratings, saying that it reflects the country’s economic stabilisation.

He noted that this upgrade will enhance Pakistan’s access to international capital markets and reduce pressure on external debt repayments.

The prime minister added that Pakistan’s macroeconomic indicators are steadily improving and this positive momentum is being acknowledged by global financial institutions and credit rating agencies.

Highlighting the broader impact of the rating improvement, the prime minister said it would help restore investor confidence in the Pakistani economy.

He also praised the government’s economic policies, saying they are now receiving international recognition.

Prime Minister Shehbaz commended the efforts of the government’s economic team, describing their performance as commendable and a key factor in this positive development.