ISLAMABAD: Prime Minister Imran Khan on Wednesday said oversubscription of sukuk by 70pc was reflective of “strong market confidence in the government’s policies”.
“Landmark financial innovation with Rs 200 bln Sukuk issued through competitive book-building at PSX. As a result govt saved Rs18 billion – savings that can now be used for welfare of the people,” the prime minister tweeted.
The government on Tuesday was able to obtain long-term borrowing below the Kibor due to significant interest from investors in the Power Energy Sukuk–II (PES).
The Rs200 billion sukuk was oversubscribed to Rs339 billion, around 70pc above the target offer, at minus 0.10pc for six months Kibor.
However, the PHL, a state-owned enterprise, approved the 10-year government-guaranteed debt instrument with semi-annual profit payments for investors amounting to Rs199.96 billion only. The instrument was issued to address liquidity constraints faced by the power sector.
This was the first time ever that the government was able to borrow long term at less than the Kibor. By raising funds in the above manner, the government saved the cost of debt by 0.88pc in comparison to the last issuance of PES-I at a cost of Kibor plus 0.8pc.
This resulted in an approximate saving of Rs17.6 billion over a period of 10 years on account of debt servicing cost.
In addition, this was the first time ever that the book building mechanism for spread discovery of any debt instrument was done through the country’s capital markets.
Commenting on the development, Power and Petroleum Minister Omar Ayub Khan and Power Secretary Irfan Alli appreciated the hard work put in by the power sector team and also acknowledged the support provided by the Finance Division, State Bank of Pakistan, Securities and Exchange Commission of Pakistan and PSX.
