The government has kick-started the process of raising Shariah-compliant debt worth Rs200 billion at the Pakistan Stock Exchange (PSX) to ease liquidity constraints and partially address circular debt in the energy sector.
This is the first time the government is using the PSX platform to raise debt. This will ensure maximum possible participation from financial institutions and rich individual investors to lend and help the government acquire the financing at minimum possible mark-up rate.
Power Holding Limited (PHL), a public sector entity fully owned by the Ministry of Energy, would auction the government of Pakistan’s guaranteed Shariah-compliant debt security named Pakistan Energy Sukuk-II (PES-II) to raise Rs200 billion through competitive bidding under the book building process at the PSX.
The participants would submit their bids like “six-month Kibor (Karachi interbank offered rate) and plus/minus basis points” to determine the rate of return at which the debt will be raised and “the issuer (PHL) will pay on a semi-annual basis to successful investors,” said PSX in a statement on Monday.
