Our Correspondent
Islamabad
The book building process of Sukuk-II of Power Holding Limited (PHL), a public sector entity fully owned by the Ministry of Energy, was successfully concluded by Pakistan Stock Exchange (PSX).
The issue has attracted significant interest from investors and has been heavily oversubscribed, at very attractive rates for PHL, said a PSX press statement adding that the private placement attracted a diverse group of investors, including banks, NBFCs, mutual funds, insurance companies, pension funds and HNWIs.
“This is the first ever debt issuance through book building in Pakistan Stock Exchange’s history and represents an important milestone in the development of debt capital markets in Pakistan,” the statement added.
The PSX is now playing a key role in helping the government raise financing for infrastructure and the power sector circular debt, in the most transparent and efficient manner.
The debt instrument is being issued to address the liquidity constraints being faced by Pakistan’s power sector.
Pakistan Energy Sukuk-II (PES-II) is a GoP guaranteed Shariah compliant security of PKR 200 Billion which is 100% SLR eligible, having a 10-year maturity with semi-annual profit payment for investors.
The book building process was held on May 18 to 19, 2020, with the bid(s) registration taking place between May 11 and May 15 2020. PSX and the bookrunners, NBP and Taurus Securities, will present the results to the board of PHL before they are made public.
The government of Pakistan decided to issue the debt through the Pakistan Stock Exchange to ensure transparency and competitive bidding.
PSX offers a state of the art, book building mechanism which is used to determine the cut-off spread (-/+) in basis points (bps) over the 6 month Kibor rate, that the issuer will pay on semi-annual basis to successful investors.
The total issue size is being offered through private placement to eligible investors, followed by a technical listing of the Sukuk on PSX.
“This Sukuk issue, for the first time undertaken through book building in Pakistan, is a watershed moment for the development of the debt market in Pakistan,” said Farrukh H Khan, MD PSX.
The book building process is used for price discovery and follows a standardized methodology in line with international best practices.
This will increase the investor base, liquidity and secondary market trading of the sukuk, enabling the GOP to borrow at the most competitive rates, he stated
He also commend the Ministry of Finance, PHL and Securities and Exchange Commission of Pakistan for facilitating process.
