PHL issues debt instrument to address liquidity constraints
PSX offers a state of the art, book building mechanism.
KARACHI (Dunya News) - The Power Holding Limited (PHL), a public sector entity fully owned by the Ministry of Energy, is issuing a debt instrument to address the liquidity constraints being faced by Pakistan s power sector.
According to a statement issued by the PSX on Monday, this will be the first ever debt issuance through book building in PSX s history and represents an important milestone.
The local bourse is playing a key role in helping the government overcome one of its biggest economic challenges i.e. power sector circular debt, it added.
The Pakistan Energy Sukuk-II (PES-II) is a GoP guaranteed Shariah compliant security of PKR 200 billion which is 100% Statutory Liquidity Requirement (SLR) eligible, having a 10-year maturity with semi-annual profit payment for investors.
This is the second issue of the Energy Sukuk by PHL, the statement said adding that the government of Pakistan decided to issue the debt through the pakistan stock exchange to ensure transparency and competitive bidding.
The PSX offers a state of the art, book building mechanism which will be 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 will be offered through private placement to eligible investors, followed by a technical listing of the Sukuk on PSX.
Commenting on the development, Farrukh H Khan, MD PSX stated, "this sukuk issue on PSX through the state of the art book building system is a watershed moment in the development in the debt market in Pakistan," He said the government, Finance Ministry and Securities and Exchange Commission of Pakistan (SECP) were focused on developing the capital market and this was an important step in that direction.
"We thank them for their support and are grateful that they have taken this important step," he added He said Pakistan was finally following the globally accepted best practice of using a book building methodology to raise debt, which benefits both issuers and investors by bringing transparency and price discovery to the center of the debt raising process.
The book building process through the Stock Exchange would benefit the issuer in that it would enable price and demand discovery. Furthermore, it would give access to a wide investor base and help enhance liquidity and secondary market trading.
After the security is listed, investors throughout Pakistan and abroad can buy or sell units of the Sukuk on the PSX BATS trading platform through their broker, it added.
