Citibank to put Islamic structure with a size up to $500 million
Pakistan is seriously considering a possibility of sukuk transaction in later part of 2014 and expects an active participation of the Middle East's banking sector, according to a top government official.
The Federal Minister for Finance, Economic Affairs, Revenue and Statistics Senator Mohammad Ishaq Dar, who was in Dubai last week to hold meetings with International Monetary Funds (IMF) and leading banks operating in the Middle East, said that prospects of raising funding through Islamic financing instruments are bright as investors across the globe have shown interest in fast improving economy of Pakistan.
The country is expected to sell more than $1 billion of Islamic bonds under Prime Minister Nawaz Sharif's plan to attract investment, boost forex reserves and overall the economy. It sold $2 billion of dollar bonds after an oversubscription led officials to raise the amount from an initial $500 million.
The finance minister met Dubai Islamic Bank (DIB) team led by its chief executive Dr Adnan Chilwan and including DIB Pakistan Limited's chairman Mohammed Saeed Al Sharif, among others. Dar and the DIB bankers discussed the prospects of sukuk issuance by Pakistan following the success of Eurobonds.
"The government would shortly issue advertisement in international and local Press to select financial advisor for sukuk transaction through a transparent and competitive process," he said.
Dr Chilwan shared the details about the sukuk market and the attractive prospects of investments through this Islamic finance instrument. "There is appetite in the market for issuance of sukuk and the government should access the market regularly," he said.
Dar also held two separate meetings with the delegations of Citibank and Standard Chartered Bank and discussed prospects of investment by the banking sector in Pakistan. He said that all economic indicators were positive and financial market was upbeat about Pakistan.
"Pakistan's foreign exchange reserves position had significantly improved on account of increased inflows from multilateral and bilateral sources," he said.
"Foreign exchange reserves are going to further increase due to inflows from the World Bank and 3G payments, CSF," he added.
Dar said that foreign exchange reserves may hit $15 billion target much before the given timeframe of September 2014.
Citibank chief executive Atiq Ur Rehman and Standard Chartered Bank CEO Christos Papadopoulos observed that there was a visible shift in financial institutions attitude, and sentiment, particularly Middle Eastern banks which were taking keen interest in Pakistan after successful launching of Eurobond.
"Pakistan would fetch favourable pricing on financing transactions and the two banks would also like to participate in Islamic structured financing as well," the two bankers said.
Citibank delegation mentioned that their bank would put another Islamic structure with a size up to $500 million. "There can be multiple transactions which can take place over a period of time," Rehman said.
Standard Chartered Bank apprised the minister that his bank would also like to participate in the financing of the Neelum Jhelum project and other infrastructure projects in Pakistan.