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September 24, 2020

Financial advisers invited to tap foreign debt market

Business

September 24, 2020

ISLAMABAD: The government on Wednesday invited applications from financial advisers to launch Eurobonds or sukuk in the international market, reviving a plan that was put on hold for almost a year.

Ministry of finance invited applications from financial advisors to help issue euro bonds or sukkuk internationally, people familiar with the matter told The News.

“Initially the term of these bonds is one year,” said a source.

Sources said the last date for applications is October 26 (Saturday). The financial advisers will help in registration, structuring and launching of medium-term note.

The government planned to issue foreign bonds last year. But, the plan was upset by the coronavirus outbreak.

The ministry didn’t disclose size of the proposed issuance, but it might raise an estimated $2 billion.

When the country last time entered into the foreign debt market in 2017, it raised $1 billion in five-year sukuk and $1.5 billion in 10-year Eurobond on lower yields. Profit rate for sukuk was 5.625 percent and for the Eurobond it was 6.875 percent.

The finance ministry invited financial advisers and planned to set up a medium-term note (MTN) program for issuance of US dollars denominated Eurobond and sukuk. MTN usually matures in five to 10 years. Investors, however, can choose from differing maturities, ranging from nine months to 30 years, under the program.

A request for proposals’ document said the finance division planned to engage two consortia, each consisting of five financial institutions, for issuance of Eurobond and sukuk under the program. The selected consortia are expected to guide, advise, manage, coordinate and execute the whole range of activities associated with the program.

Pakistan is entering international debt market at a time when International Monetary Fund (IMF) program is halted.