Raising finance: Tameer Microfinance taps capital market

Bank lists two TFCs each having size of Rs500m.

KARACHI: Tameer Microfinance Bank Limited (TMBL) President Nadeem Hussain marked the formal listing of TMBL’s two term finance certificates (TFCs) on Monday by hitting the gong on the Karachi Stock Exchange (KSE) at the beginning of the trading session.

Issued as rated, listed and partially secured TFCs, Tameer Sarmaya Certificate-I and Tameer Sarmaya Certificate-II are instruments of redeemable capital with total issue size of Rs500 million each. TMBL will utilise the proceeds of the issue, comprising the subscription amounts, for expansion of its advances portfolio, according to Hussain.

TFC-I will have a tenor of 13 months with profit of 12% per annum payable on a monthly basis. Similarly, TFC-II will have a tenor of 24 months, offering a profit of 12.5% payable on a monthly basis.

“Microfinance banks don’t generally go to the capital market to raise money. One of the reasons we decided to issue TFCs was to create awareness of our bank among retail investors,” Hussain said while speaking to The Express Tribune.

He added the response from investors has been overwhelming, as 90% of subscribers are retail investors.



Notably, the TFCs have already been fully subscribed although the three-month subscription period – during which allotment was done on first-come-first-served basis – is going to end on February 21.

“I hope other microfinance banks will follow the example of TMBL by raising money from the debt market,” Hussain added.

Both TFC-I and TFC-II are partially secured, as they are guaranteed up to the extent of 40% of the outstanding principal component of the redemption amount through the Microfinance Credit Guarantee Facility of the State Bank of Pakistan in case the bank defaults.

Hussain said TMBL’s TFCs are the first debt instruments with a denomination of Rs5,000, as most bonds in Pakistan have the face value of Rs10,000 or more.

JS Global Capital will act as market-maker for the issue, which means that it will ensure liquidity by offering bid and ask quotes on a daily basis with a maximum spread of 2.5%. The market-maker will determine the price based on the prevailing liquidity, interest rates and credit risk of TMBL.

“Developing the bond market is highly important for the KSE management. We want more and more private-sector companies to take advantage of the debt market,” said KSE Managing Director Nadeem Naqvi while speaking to The Express Tribune.

“TMBL’s TFCs offer good interest rates and will be easily tradable. Investors can go to a broker any time and redeem their investments,” he added.

Naqvi said the TFCs would encourage people to pull out their investments from the unregulated sector of the economy and invest in the capital market because of the liquidity and quick returns that the TFCs offered.

Published in The Express Tribune, January 15^th, 2013.

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