Govt invites bids from financiers as it eyes more borrowing

ISLAMABAD: A day after raising $750 million through a Eurobond at an interest rate of 6.975 per cent for three years, the government on Tuesday invited bids from international consortiums to act as underwriters, lead managers and book runners for future transactions in global capital markets over the next three years.

The bidders would be selected on the basis of the lowest yield, lowest coupon and lowest overall cost, an official said, adding that this would enable the government to raise funds from the global capital markets as and when required and depending on the external financing needs.

The three consortiums would be expected to launch Pakistan’s three types of capital market transactions. This would include renewing its Global Medium-Term Note (GMTN) Programme and Sukuk Trust Certificate Issuance (TCI) Programme for three years.

These programmes would facilitate a range of international issuances, including Eurobonds such as ESG bonds, green bonds, gender bonds, sustainable bonds and sustainability-linked bonds, as well as international Sukuk and local currency-denominated bonds settled in US dollars.

Pakistan upsized its Eurobond on Monday to $750m, launched earlier by a consortium led by Standard Chartered Bank, at a 6.975pc markup for a maturity in April 2029, to replace part of the repayments to the United Arab Emirates at a similar markup rate.

“This plan only selects underwriters and advisers across three different funding structures. Within this plan, the Ministry of Finance will decide as and when we will tap the market, based on the external funding requirements, over the next three years,” he said.

The timing of the issuance of instruments shall depend on prevailing market conditions, as advised by the selected transaction advisers, and be subject to Pakistan’s funding requirements. The size of each issuance will depend on market conditions at the time of execution. The selected consortiums will be required to structure, advise, manage, coordinate and execute the whole range of activities associated with these programmes.

Consortium-1 shall comprise up to five conventional international financial institutions appointed as joint lead managers, underwriters and bookrunners for the issuance of Eurobonds. The consortium shall be jointly responsible for structuring, pricing, underwriting, syndicate management, investor outreach, roadshows, book-building and allocation, ensuring broad international distribution and high-quality order books.

Consortium-2 shall also comprise up to five international financial institutions, including at least one international Islamic financial institution to act as joint lead managers, underwriters and bookrunners for the issuance of international Sukuk.

This consortium shall be jointly responsible for structuring, pricing, underwriting, syndicate management, investor outreach, roadshows, book-building and allocation, ensuring broad international distribution and high-quality order books.

Likewise, Consortium-3 shall comprise up to three international financial institutions to be appointed as joint lead managers for a PKR-denominated, USD-settled international bond under the GMTN Programme.

The consortium shall be jointly responsible for structuring, pricing, underwriting, syndicate management, investor outreach, roadshows, book-building, and allocation, ensuring broad international distribution and high-quality order books.

The prospective institutions would be required to submit their technical and financial proposals for selection for each financial instrument, i.e. Eurobonds, Sukuks, and PKR-denominated dollar-settled bonds. The bids will be opened on May 25, which is also the deadline for submission.