ISLAMABAD: Power Holding Limited (PHL), a public sector entity fully owned by the Ministry of Energy, is issuing Rs200 billion debt instrument to address the liquidity constraints being faced by Pakistan’s power sector.
“This will be the first-ever debt issuance through book building in Pakistan Stock Exchange’s history and represents an important milestone,” said a PSX press statement issued on Monday. “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.”
The Pakistan Energy Sukuk-II (PES-II) is GoP-guaranteed Shariah-compliant security of Rs200 billion which is 100pc Statutory Liquidity Requirement (SLR) eligible, having a 10-year maturity period 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 PSX 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, PSX Managing Director Farrukh H Khan remarked, “This sukuk issue on PSX is a watershed moment in the development of Pakistan’s debt market.”
He said the government, finance ministry and Securities and Exchange Commission of Pakistan (SECP) are 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 centre of the debt raising process.
According to the statement, 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, the statement added.
