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Pakistan entering global bond market after 2 years
Decision to launch dollar, sukuk bonds likely in 45 days
Tuesday, July 27, 2010
By Khurram Bari Khan
KARACHI: After a gap of two years, Pakistan is set to tap the international bond market and a formal decision will be taken within 45 days, a senior official of the Finance Ministry told The News on Monday.
There is no firm decision yet but we are evaluating the global market and will finalise the details within one and a half months, said the official on the condition of anonymity by telephone from Islamabad.
Pakistan plans to raise 500 million to one billion dollars from the international market to support its budget during the current fiscal year. It may offer one, or both, dollar bonds and Sukuk (Islamic bonds) depending on the market situation.
We need to see whether we will be able to raise the money on our own strength or with the help of a counter guarantee such as ADB (Asian Development Bank) or some other donor, he added.
Mohammad Sohail, Chief Executive Officer of Topline Securities, said that there was ample liquidity in the international bond market last year, but Pakistan missed the chance.
Now the situation is not that favourable after the recent European financial crisis, he added. The financial crunch, especially in Europe and Dubai, hit hard the global bonds market and created an acute liquidity crunch. Early this year, even the global sales of Sukuk went down by 23 percent to $6.48 billion.
Recently, there has been some slight improvement which has apparently encouraged Pakistans economic managers to re-enter the global bond market to raise the much-needed funds for the country.
If the government does proper homework, they should be able to fetch a return of 7 to 8 percent (per annum), Sohail said, adding the current rate of return on the three international bonds, which Pakistan launched earlier, is in the similar range.
Pakistan last entered the international bond market in 2007. Since then, the government planned several times to re-enter the bond market, but due to the domestic political instability or international conditions failed to do so.
Now it plans to launch the new bonds by the end of this year. The Finance Ministry official said that the first step to launch the bond starts with the appointment of a financial advisor. This will be followed by road-shows and then the global debt offering.
He dispelled the impression that the issue might get delayed till next year because of the global scenario. We need to check whether lenders are ready to invest. The countryís economic and law & order situation will obviously have an impact on the bond issue, he added.
Pakistan entering global bond market after 2 years
Decision to launch dollar, sukuk bonds likely in 45 days
Tuesday, July 27, 2010
By Khurram Bari Khan
KARACHI: After a gap of two years, Pakistan is set to tap the international bond market and a formal decision will be taken within 45 days, a senior official of the Finance Ministry told The News on Monday.
There is no firm decision yet but we are evaluating the global market and will finalise the details within one and a half months, said the official on the condition of anonymity by telephone from Islamabad.
Pakistan plans to raise 500 million to one billion dollars from the international market to support its budget during the current fiscal year. It may offer one, or both, dollar bonds and Sukuk (Islamic bonds) depending on the market situation.
We need to see whether we will be able to raise the money on our own strength or with the help of a counter guarantee such as ADB (Asian Development Bank) or some other donor, he added.
Mohammad Sohail, Chief Executive Officer of Topline Securities, said that there was ample liquidity in the international bond market last year, but Pakistan missed the chance.
Now the situation is not that favourable after the recent European financial crisis, he added. The financial crunch, especially in Europe and Dubai, hit hard the global bonds market and created an acute liquidity crunch. Early this year, even the global sales of Sukuk went down by 23 percent to $6.48 billion.
Recently, there has been some slight improvement which has apparently encouraged Pakistans economic managers to re-enter the global bond market to raise the much-needed funds for the country.
If the government does proper homework, they should be able to fetch a return of 7 to 8 percent (per annum), Sohail said, adding the current rate of return on the three international bonds, which Pakistan launched earlier, is in the similar range.
Pakistan last entered the international bond market in 2007. Since then, the government planned several times to re-enter the bond market, but due to the domestic political instability or international conditions failed to do so.
Now it plans to launch the new bonds by the end of this year. The Finance Ministry official said that the first step to launch the bond starts with the appointment of a financial advisor. This will be followed by road-shows and then the global debt offering.
He dispelled the impression that the issue might get delayed till next year because of the global scenario. We need to check whether lenders are ready to invest. The countryís economic and law & order situation will obviously have an impact on the bond issue, he added.
Pakistan entering global bond market after 2 years
