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Hafeez Shaikh admired role of Pakistan Stock Exchange (PSX) in Pakistan Energy Sukuk-II

KARACHI: Pakistan Stock Exchange (PSX) held a gong ceremony to mark the successful book building and listing of Power Holding Limited’s Rs 200 billion Pakistan Energy Sukuk-II (PES-II).

The book building process managed by Pakistan Stock Exchange, was a landmark event which concluded on May 19, 2020. The listing of the Sukuk took place on July 28, 2020. The gong striking ceremony was held to formally mark this exciting event of the first ever debt issuance through book building and listing of the said debt issue (PES II) at the Pakistan Stock Exchange.

The Advisor to Prime Minister on Finance and Revenue, Dr. Abdul Hafeez Shaikh was the chief guest at the event. Also present were Aamir Khan – Chairman, Securities and Exchange Commission of Pakistan (SECP); Dr. Reza Baqir – Governor, State Bank of Pakistan (SBP); Sulaiman S. Mehdi – Chairman PSX and Members of the PSX Board; Farrukh H Khan – CEO, PSX; Arif Usmani – President and CEO, National Bank of Pakistan; Zain Hussain – CEO, Taurus Securities; Irfan Siddiqi – President and CEO, Meezan Bank Limited; Dr. Naim Abdullah – Head of Treasury, Dubai Islamic Bank Pakistan Limited; Atif Bajwa – President and CEO, Bank Alfalah Limited; Aqeel Karim Dhedhi – Chairman, Pakistan Stock Brokers Association; Arif Habib and Jahangir Siddiqi – former presidents, Karachi Stock Exchange; businessmen, senior management and other staff members of banks, institutions and afore mentioned 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 gong bell to open the market followed by the remarks by the SECP Chairman, Aamir Khan.

Dr Abdul Hafeez Shaikh 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.

Dr. Abdul Hafeez Shaikh 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.”

“For the first time the government raised Rs 200 billion through Sukuk at less than KIBOR rate, through competitive book building at PSX, saving Rs 18 billion over 10 years of debt servicing,” he added.

The Advisor to the PM said that the Pakistan Stock Exchange has become best performing market in Asia and fourth best performing market in the world.

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 Advisor on Finance and 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 said, “It sets precedence for other debt listings to engage in the state of the art competitive book building managed by the Stock Exchange, which will enable government of Pakistan and private companies to raise capital at the most competitive cost, while providing attractive investment opportunities to investors.”

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 percent or by about 139 billion against the targeted amount of Rs 200 billion. The PHL Sukuk is a debt instrument with 10-year maturity with semi-annual profit payments for investors. It is a 100 percent 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 was 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 competitive book building process for PES II helped raise the targeted amount of Rs 200 billion 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 billion by the government of Pakistan 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 government of Pakistan 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.

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