United Bank Limited (UBL), one of Pakistan’s largest commercial banks, has executed Pakistan’s largest-ever Interest Rate Swap (IRS), entering into a Rs75 billion (USD 270 million) transaction with Pakistan Mobile Communications Limited (Jazz).
The agreement, which occurred on Friday, converts the telecom operator’s floating-rate exposure into a fixed-rate obligation.
This would enhance its “cost visibility and long-term financial planning certainty,” said Arif Habib Limited (AHL), in a note on Monday.
The brokerage house shared that the benchmark KIBOR on the prevailing floating rate loan was last reset in November 2025, with total borrowing cost likely in the range of 11.5%-12.0%.
“By fixing the rate, Jazz secures cost predictability and shields itself from potential interest rate increases in the future,” it said.
Commenting on the development, Aamir Ibrahim, Chief Executive Officer, JazzWorld, said, “This transaction reflects JazzWorld’s disciplined approach to financial risk management and long-term value creation. By proactively hedging interest-rate exposure, we are strengthening cash-flow certainty while continuing to invest in Pakistan’s digital connectivity infrastructure and future-ready network capabilities”.
Muhammad Jawaid Iqbal, President & CEO United Bank Limited, mentioned that the IRS transaction would pave the way for development of the interest rate swap and derivative market in Pakistan.
He added that the deal signaled “UBL’s readiness to pursue more ambitious and high-impact opportunities in the future, and expected that other banks will also now come forward to undertake large derivative transactions,” according to a press release.
AHL shared that for every 50–200 basis points (bps) decline in floating rate, UBL could generate an estimated annual gross benefit, i.e. before tax, of approximately Rs0.38–1.50 billion.
“This transaction marks a structural deepening of Pakistan’s derivatives market and reflects growing institutional confidence in a medium-term easing cycle.
“By taking long-term fixed-rate exposure without deploying balance-sheet capital, UBL is effectively positioning for a structurally lower interest-rate regime, a signal that could influence pricing behaviour across the banking sector and support compression in medium- to long-term bond yields,” said AHL.
Meanwhile, for corporates, the transaction highlights increasing sophistication in liability management, while for banks it opens a new avenue for risk-based earnings outside traditional lending, potentially enhancing earnings diversification, it added.
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