Laos has received a credit rating upgrade after issuing a USD 500 million international bond and signing a tax agreement with Hong Kong aimed at reducing costs for cross-border investors.
On 29 October, S&P Global Ratings upgraded Laos’s long-term credit rating from CCC+ to B-, with a stable outlook, indicating that the government is now considered better able to repay its debts, although significant financial risks remain. The S&P cited tighter government spending, efforts to stabilize the Lao kip, and recovering foreign exchange reserves following the balance-of-payments crisis of the early 2020s. It also noted 10 percent growth in international tourist arrivals in the first half of 2026, alongside activity in hydropower and mining.
Laos Raises USD 500 Million Through Bond Sale
In October, Laos issued USD 500 million in government bonds at an annual interest rate of 9.625 percent. The bonds, due in 2032, are listed on the Hong Kong Stock Exchange.
This was Laos’s second international US dollar bond offering, following a USD 300 million issuance in November 2025. The earlier bonds carried an annual interest rate of 11.25 percent and were listed on the Singapore Exchange.
The latest issuance raised more money at a lower interest rate, potentially reducing borrowing costs compared with the previous sale.
The bonds were also included in the JPMorgan Emerging Markets Bond Index (EMBI), a benchmark international investors use to track emerging-market government debt. Inclusion can increase the bonds’ visibility among institutional investors and help Laos broaden its investor base.
Demand exceeded the amount offered by 2.9 times, with 86 institutional investors participating from Asia, Europe, the Middle East, Africa, and the United States, according to the Ministry of Finance.
The sale provides another source of government financing, but Laos still faces significant debt obligations. Annual public external debt service is estimated at around USD 2.1 billion, including principal and interest payments. About USD 1 billion in short-term foreign-currency debt also needs to be refinanced or rolled over each year.
More than 40 percent of Laos’s public external debt is owed to bilateral creditors, mainly China. Agreements to defer some principal repayments have eased immediate pressure, but the resumption of full repayments remains a risk, according to S&P Global Ratings.
Laos and Hong Kong Sign Tax Agreement
Laos and Hong Kong signed a double-taxation agreement on 29 October to clarify tax obligations for businesses and individuals operating across the two jurisdictions.
Lao Deputy Finance Minister Soulivath Souvannachoumkham and Hong Kong Acting Secretary for Financial Services and the Treasury Joseph Chan signed the pact.
It allows Hong Kong residents to claim eligible taxes paid in Laos as a credit against Hong Kong tax on the same income. Laos will also reduce withholding tax on dividends paid to Hong Kong residents from 10 percent to 5 percent for qualifying shareholdings and to 8 percent for other holdings. The rate on interest payments will fall from 10 percent to 5 percent, while royalties will be subject to a 5 percent rate.
The agreement also provides for the exchange of tax information, with safeguards for taxpayer confidentiality, and aims to prevent tax evasion and reduce uncertainty for cross-border investors.
It will take effect after both sides complete their approval procedures.
