ISLAMABAD
Pakistan on Monday initiated the process for floating Sukuk bond (Shariah-compliant bond) in international market that would generate minimum $500 million for the national kitty, as Finance Minister Senator Ishaq Dar concluded the Middle East road shows.
Finance Minister after holding a road show in Dubai on Monday has left for London wherein he would hold another road show on Tuesday. The group meetings in Abu Dhabi and Dubai were well received by a wide range of quality investors, including fund managers, private banks, and local and international financial institutions.
Pakistan, which had engaged four banks including Citigroup, Deutsche Bank, Dubai Islamic Bank and Standard Chartered for this process, would offer $500 million of Sukuk bonds and the exact size of the bond would depend upon offers, which expected to be over $1 billion.
The government plans to increase country's foreign exchange reserves to $15 billion by December 31, 2014 through floating $500 million Sukuk bonds and receiving the fourth and fifth tranche amounting to $1.1 billion from the International Monetary Fund (IMF). Pakistan's foreign currency reserves stood at $13.228 billion including $8.493 billion held by State Bank of Pakistan and $4.734 billion held by commercial banks.
The government envisaged target to touch $15 billion mark on account of foreign currency reserves till December 31, 2014. Pakistan would eligible for loans from the International Bank for Reconstruction and Development (IBRD) that would enable it to undertake major projects after enhancing its reserves to $15 billion level.
According to the official handout issued here, investors conferences on Sukuk bonds began here Monday with the inaugural conference being held in Abu Dhabi in the morning followed by the second conference in Dubai later in the afternoon. Having successfully concluded the Middle East road shows/investors conferences, the Pakistan team led by the Finance Minister Ishaq Dar left Dubai for London. A US Dollar denominated benchmark 144A/Regulation S Sukuk transaction would follow subject to market conditions and investors response after conclusion of investors' conferences tomorrow in Singapore and London.
Riding on the recent successful Euro-Bond issue in April, 2014 which was oversubscribed fourteen times, but the Government decided to take only $2 billion against offers of over $7 billion, and announced that the Government has priority for Shariah-compliant bonds (Sukuk) for giving an equal chance to Islamic investors in Islamic papers. Therefore, the economic team has now embarked upon tapping the fast growing and highly liquid base of Sukuk investors to consolidate macro-economic stability direction and enhance the forex reserves of the country. Universal acceptance of Sukuk as a strong alternative to regular conventional bonds and earlier announced in April, 2014 are key drivers for this beginning which has already witnessed significant interest from investors in the Middle East today. Successful conclusion will assist the country to continue its wide-ranging development plans in the energy, infrastructure and other essential sectors.
Pakistan team is led by the Minister for Finance, Senator Muhammad Ishaq Dar who is accompanied by the Additional Secretary (External Finance).