Soneri Bank’s second TFC: Investors taking keen interest in bond market

Arif Habib says debt market getting vibrant with each listing


Our Correspondent August 20, 2015
PHOTO: ONLINE

KARACHI: Arif Habib Corporation CEO Arif Habib said on Wednesday the debt market was getting more vibrant with the listing of every new term finance certificate (TFC).

Speaking at the gong-ringing ceremony for the listing of Soneri Bank’s second TFC at the Karachi Stock Exchange (KSE), Habib said the listing will further bolster the bank’s well-capitalised balance sheet and support growth.

Referring to listings of debt securities issued by NIB Bank and Bank Alfalah in the past, he said investors were getting increasingly interested in the bond market.

Soneri Bank has raised Rs3 billion through the TFC. Of the total issuance amount, Rs2.25 billion was raised through private placement while the remaining amount of Rs750 million was raised through the initial public offering that took place on July 7 and 8.

The total demand received was Rs3.81 billion against the total issue size of Rs3 billion, which means the instrument was oversubscribed by Rs810 million or 1.3 times.

Arif Habib Limited, the investment banking arm of Arif Habib Corporation, served as the lead adviser, arranger and underwriter for the transaction.

The payment of profit will be made semi-annually at a floating rate of 6-month Karachi Inter-Bank Offered Rate (KIBOR) plus 135 basis points per annum. While 0.3% of the principle will be redeemed in the first 90 months, the remaining principle (99.7%) will be retired at maturity at the end of the 96th month.

Soneri Bank operates through a network of 247 branches, including 15 Islamic banking branches, in Pakistan.

Case of REIT

Referring to Real Estate Investment Trust (REIT) that his company setup and got listed earlier this year, Habib said investors’ response has been overwhelming. “At least two REITs are in the pipeline that we intend to launch in the current fiscal year,” he said.

Speaking on the occasion, KSE Managing Director Nadeem Naqvi said the exchange’s demutualisation process was now on the fast track.

He said KSE was in talks with Borsa Istanbul and Qatar Stock Exchange with regard to its search for a strategic investor.

Different approaches to the demutualisation process, such as changing the timing of the Initial Public Offering (IPO) and the sale of 40% shares to a strategic investor, were under consideration, he noted.

Saying that the stock market was not over-valued, Naqvi stated the share of market capitalisation in the GDP was hovering around 32%. In contrast, market capitalisation as a percentage of the GDP was 42% before the stock market crash of 2008, he said.

Addressing the media, Soneri Bank President Mohammad Aftab Manzoor said his bank planned to open 20 new branches in this year. Saying Soneri Bank was eager to invest in small and medium enterprises (SMEs), Manzoor stated such banks should embrace documentation to get easy access to capital.

Published in The Express Tribune, August 20th,  2015.

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