Government of Pakistan debt securities PDF

Preview

Summary

abcd...

Description

Acknowledgement

I would like to express my gratitude on behalf of my group members, special thanks to our instructor Dr. Mujeeb ur Rehman bhaiyo for his able to guidance and support in our course fixed income security and gives us an opportunity to work on debt instruments in Pakistan.

Government of Pakistan debt securities Introduction Government debt instruments are issued by ministry of finance of Pakistani government. government debt securities are considered safe because principal and repayment are guaranteed by federal government. When expenses increase as compared to revenue than government issue securities to fill gap. the main objective of debt management is to ensure financing needs for day-to-day operations, projects, infrastructures, Advantage of investing in government debt securities, tax benefit, low risk investments because it considered as low default risk in government., therefore bonds typically pay lower interest rate.

Role of state bank of Pakistan State bank of Pakistan is responsible for managing domestic public debt securities in Pakistan. It serves as agent of government of Pakistan, it regulates auction of government marketable securities. it regulates primary dealers of government securities national bank of Pakistan, standard charter bank, MCB bank, the bank of Punjab etc. are primary dealers of securities. The goal of state bank is to improve liquidity in debt market by regulating prices, managing banks intermediation process, and creates channels for investors to invest in secure instruments. Public debt market A market where debt instruments are traded to raise funds for government either from local or from foreign investors. Various types of debt securities are issued by government of Pakistan.     

Pakistan investment bonds Marketable securities National saving certificates Eurobonds Government of Pakistan ijara Sukuks

findings Government owned enterprises WAPDA Water and development authority aim to issue long term dollar denominated green euro bonds $ 500 million by march 2020 to raise funds for mega hydroelectric power and water project. But it delayed due to COVID-19 . WAPDA has planned to issue bonds in five trenches it will issue $100 bonds per year for next five years. An official said that it is not difficult to issue $500 bond at one time but it cannot be utilized lump sum amount on mega project, so this is the reason for issuing bonds in trenches. A source said, to invest in green euro bonds international investors has showed interest when a government delegation visited Dubai and London and discussed about mega project in international financial market.

Credit rating Moody’s investors service one of top global rating agency has rated corporate family rating B3 to WAPDA first time in history and it looks stable to raise new funds.

WAPDA SUKUK to initiate Mangla dam project, WAPDA needed 8000 million PKR. So, keeping in view of WAPDA needs and requirements for project Citigroup was a shariah advisor asked WAPDA to issue sukuk. issuer WAPDA, issue privately floating rate note sukuk trust certificates. Total principal amount of 8000million, maturity 7 years, Interest rate 6month KIBOR plus 35basis points. Underlying asset Mangla dam.it was first time in Pakistan sukuk was issued in local currency of Pakistan. WAPDA also issued sukuk for raise funds of R.S 100 billion for Neelam and Jhelum projects. WAPDA raise funds mostly from international market, Germany supports WAPDA for its projects. It raises funds mostly from local markets on his own behalf due to its good rating in financial market.

Steel mill Government of Pakistan settled liability of steel mill of 100 billion. National bank of Pakistan and Sui southern gas company. Government promised to SSGC that it will be provided an interest-bearing note of 44.5 billion against its payables. Land as an asset was given to national bank of Pakistan. Pakistan international Airline Government has decided to issue sukuk to raise funds of R.S 20 billion to face liquidity crisis.it will be called as sovereign sukuk because it is backed by government of Pakistan. https://www.thenews.com.pk/print/463804-wapda-plans-500-million-green-eurobonds-intranches-by-march-2020 https://www.sbp.org.pk/DFMD/FS-Auc.asp http://www.wapda.gov.pk/index.php/newsmedia/news-views/309-wapda-chairmandiscusses-financing-of-wapda-projects-with-kfw https://tribune.com.pk/story/2270155/moodys-assigns-b3-rating-to-wapda https://tribune.com.pk/story/1309066/ailing-steel-mill-govt-offers-nbp-land-ssgc-bondssettle-psm-debt...