ISLAMABAD, Sep 7 (APP): Advisor to Prime Minister on Finance and Revenue, Dr. Abdul Hafeez Shaikh Monday appreciated the strong performance of the Pakistan Stock Exchange (PSX) and congratulated it on being named the best performing market in Asia.
The advisor was speaking at PSX gong ceremony to mark the successful book building and listing of Power Holding Limited’s (PHL’s) Rs 200 billion Pakistan Energy Sukuk-II (PES-II), according to press statement issued by the Finance Ministry here.
He also congratulated the team on bringing the Sukuk Issuance to fruition, it said adding that the performance of the stock exchange was particularly creditable considering the recent challenges faced by Pakistan and Karachi.
“I congratulate all the market participants and transaction leads who made the listing of Pakistan Energy Sukuk II a success,” he said and termed it an excellent team effort of Ministry of Finance Debt Office, Securities and Exchange Commission of Pakistan (SECP), State Bank of Pakistan (SBP) and PSX.”
He said that for the first time the government raised Rs200 billion through Sukuk at less than KIBOR rate, through competitive book building at PSX, saving Rs 18 billion over 10 years of debt servicing.
It is pertinent to mention here that the book building process managed by PSX, was a landmark event which concluded on May 19, 2020 while the listing of the Sukuk took place on July 28, 2020. The gong striking ceremony was held to formally mark this exciting event of the first ever debt issuance through book building and listing of the said debt issue (PES II) at the Exchange.
Speaking on the occasion, PSX CEO, Farrukh Khan said that the competitive book building sets a precedence for other debt listings to engage in the state of the art competitive book building managed by the Stock Exchange, which will enable the government and private companies to raise capital at the most competitive cost, while providing attractive investment opportunities to investors.”
Power Holding Limited’s Pakistan Energy Sukuk II is a Shariah compliant debt instrument which was issued through the competitive book building process managed by Pakistan Stock Exchange.
This process allowed for a competitive price discovery and attracting a large number of investors and success of this process could be gauged from the fact that the issue was over-subscribed by 70% or by about 139 billion against the targeted amount of Rs 200 Bln.
The PHL Sukuk is a debt instrument with 10-year maturity with semi-annual profit payments for investors. It is a 100% SLR eligible government guaranteed security.
The Government of Pakistan decided to issue the debt through PSX to improve pricing. PSX offers a state of the art book building mechanism which was 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 competitive book building process for PES II helped raise the targeted amount of Rs 200 billion at a rate less than the Kibor rate, i.e. Kibor minus 10 bps.
This translates to an annual interest saving of approximately Rs 1.8 Bn by the government as compared to the debt servicing on PES I which was earlier issued as a debt security by PHL.
The competitive book building process not only led to more competitive borrowing rates for the GoP but would also lead to greater liquidity and secondary market trading of the Sukuk.
This was an all-round commendable effort on part of PSX along with the support and guidance of the SECP, SBP, and the Ministry of Finance.
The book runners, NBP and Taurus Securities also did an admirable job of undertaking the large new issue, the statement added.