KARACHI: Adviser to the Prime Minister on Finance and Revenue Dr. Abdul Hafeez Shaikh reiterated on Monday the government’s resolve to provide a conducive environment to investors in the country.
Speaking to media during his visit to the Pakistan Stock Exchange (PSX) where he attended a ceremony held to mark the listing of PHL’s Pakistan Energy Sukuk II worth Rs200 billion on the Exchange, he said subsidy is being provided to 90 percent consumers of gas and utility stores to provide relief to the public.
Hafeez Shaikh said the government gave power and gas subsidies to the industrial sector to spur economic growth and urged the business community to find new markets for their products and utilise new instruments for the promotion of businesses.
He said there was a crisis-like situation when the incumbent government came to power, adding it strove to put the economy on the right track and brought in programmes to give cash handouts to the poor to alleviate poverty. He pointed out that the government was giving special attention to eliminating poverty and improving living standards of the underprivileged sections of society. The adviser said the government commends the private sector’s role in jacking up exports.
Also present wereMr. Aamir Khan – Chairman, Securities & Exchange Commission of Pakistan (SECP); Dr. Reza Baqir – Governor, State Bank of Pakistan (SBP); Mr. Sulaiman S. Mehdi – Chairman PSX and Members of the PSX Board; Mr. Farrukh H Khan – CEO, PSXm Mr. Arif Usmani – President and CEO, National Bank of Pakistan; Mr. Zain Hussain – CEO, Taurus Securities; Mr. Irfan Siddiqi – President & CEO, Meezan Bank Limited; Dr. Naim Abdullah – Head of Treasury, Dubai Islamic Bank Pakistan Limited; Mr. Atif Bajwa – President & CEO, Bank Alfalah Limited; Mr. Aqeel Karim Dhedhi – Chairman, Pakistan Stock Brokers Association; Mr. Arif Habib & Mr. Jahangir Siddiqi – former Presidents, Karachi Stock Exchange; businessmen, senior management andother staff members of banks, institutions and aforementioned organisations.
The gong striking ceremony was an exciting event with the CEO PSX welcoming the guests after which the Chief Guest along with the transaction leads struck the gongbell to open the market. Thereafter, followed the remarks by the SECP Chairman, Mr. Aamir Khan. The Chief Guest on the occasion, Dr Abdul Hafeez Shaikh, Advisor to the PM on Finance & Revenue congratulated the team on bringing the Sukuk Issuance to fruition. He also appreciated the strong performance of the Exchange and congratulated PSX on being named the best performing market in Asia. This is particularly creditable considering the recent challenges faced by Pakistan and Karachi. A prominent part of the event was the distribution of mementos to the stakeholders of the Sukuk transaction by the Chief Guest. The Chairman of Pakistan Stock Exchange, Mr. Sulaiman S. Mehdi, and the CEO of PSX, Mr.Farrukh Khan, expressed their gratitude to the Chief Guest for his visit by presenting a token of appreciation to the HonourableAdvisor on Finance & Revenue, Dr. Abdul Hafeez Shaikh.
Welcoming the chief guest and other guests at the occasion, Farrukh Khan, CEO PSX, said, “It is an honour for me and all of us at PSX that the HonourableAdvisor on Finance & Revenue, Dr. Abdul Hafeez Shaikh is visiting us to formally mark the listing of PHL’s Pakistan Energy Sukuk II. The competitive book building preceding the listing is a watershed event in itself not only for the Stock Exchange and the capital market of the country, but also for the economy in general”. He further added, “It sets a precedence for other debt listings to engage in the state of the art competitive book building managed by the Stock Exchange, which will enable GOP and private companies to raise capital at the most competitive cost, while providing attractive investment opportunities to investors”.
Speaking at the occasion, Dr. Abdul Hafeez Shaikh, Advisor to PM on Finance & Revenue, said, “I congratulate all the market participants and transaction leads who made the listing of Pakistan Energy Sukuk II a success. It was an excellent team effort of Ministry of Finance Debt Office, SECP, SBP and PSX”. The Advisor further stated, “For the first time the Government raised Rs 200 Bn through Sukuk at less than KIBOR rate, through competitive book building at PSX, saving Rs 18 Bn over 10 years of debt servicing”.
Power Holding Limited’s Pakistan Energy Sukuk II is a Shariah compliant debt instrument which was issued through the competitive book building process managed by Pakistan Stock Exchange. This process allowed for a competitive price discovery and attracting a large number of investors. The success of this process can be gauged from the fact that the issue was over-subscribed by 70% or by about 139 Bn against the targeted amount of Rs 200 Bn. The PHL Sukuk is a debt instrument with 10-year maturity with semi-annual profit payments for investors. It is a 100% SLR eligible government guaranteed security. The Government of Pakistan decided to issue the debt through PSX to improve pricing. PSX offers a state of the art book building mechanism which wasused 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 competitive book building process for PES II helped raise the targeted amount of Rs 200 Bn at a rate less than the Kibor rate, i.e. Kibor minus 10 bps. This translates to an annual interest saving of approximately Rs 1.8 Bn by the GoP as compared to the debt servicing on PES I which was earlier issued as a debt security by PHL. The competitive book building process not only led to more competitive borrowing rates for the GoP but will also lead to greater liquidity and secondary market trading of the Sukuk. This was an all-round commendable effort on part of PSX along with the support and guidance of the SECP, SBP, and the Ministry of Finance. The book runners, NBP and Taurus Securities also did an admirable job of undertaking the large new issue.