PC to float bonds for state-run companies

PC board gives go-ahead for floating equity-linked papers for state-owned enterprises in the international market.

ISLAMABAD: The Privatisation Commission (PC) board has given the go-ahead for floating equity-linked papers or convertible bonds for state-owned enterprises in the international market.

The PC board, which met here on Thursday under the chairmanship of Privatisation Minister Waqar Ahmed Khan, believed it is the right time to tap investment through these papers.

The board was informed about the low global interest rate environment as Pakistan’s credit spreads returned to pre-crisis levels. Five-year CDS (credit default swap) stood at 400 basis points.

Sovereign bond issuers and corporate bodies from emerging and developed economies are regularly tapping the equity-linked market due to its attractive size and speed of execution, the meeting was told.

In this connection, the privatisation minister will address the Pakistan Capital Markets and Privatisation Forum at the London Stock Exchange on November 19.

The PC is endeavouring to turn around the state-owned units and reduce the losses and the board also gave approval for hiring international financial advisers for the purpose.

The PC has also planned secondary public offerings of Habib Bank, United Bank, Oil and Gas Development Company, Pak Petroleum and Kot Addu Power Company.

Privatisation transactions via capital markets (22 out of 167 transactions) have so far raised Rs133 billion out of the total privatisation proceeds of Rs477 billion. Currently, the KSE is trading at a discount of 50 per cent to the region on price to earnings multiple basis, reflecting the room for improvement.

Published in The Express Tribune, November 5^th, 2010.