Issuance of PKR 200 bn Pakistan Energy Sukuk II – Islamic finance delivers another milestone transaction for Pakistan in difficult times
Meezan Bank, Pakistan’s first and largest Islamic bank has played a leading role in successfully concluding the issuance of Pakistan Energy Sukuk (PES) II worth approximately PKR 200bn by Power Holding Limited (PHL), a public sector entity fully owned by the Ministry of Energy and Government of Pakistan. The milestone transaction, powered by the key Islamic finance players of the country was concluded successfully in May 2020. The Sukuk aims to help the Government in addressing the challenges for resolving circular debt in the country’s power sector. Meezan Bank acted as an Investment Agent and Trustee for this issue. In addition, Meezan Bank was also the Joint Financial Advisor along with Dubai Islamic Bank Pakistan and Bank Alfalah Islamic. This is the second issuance of this series of Sukuk, bringing the total size of Shariah-compliant Energy Sukuk to approximately PKR 400bn. National Bank Limited along with Taurus Securities Limited led the Book Building process to conduct Pakistan’s first and largest book building for a Sukuk issue through Pakistan Stock Exchange (PSX). This issue could not have been possible without the support of the Securities and Exchange Commission of Pakistan (SECP), State Bank of Pakistan (SBP) and Ministry of Finance also played a significant role in the successful conclusion of the transaction. The Sukuk issue was 1.7 times over-subscribed and the rate of return paid by PHL was very competitive and saved the Government significant financing cost. The Sukuk issuance is a strong indicator of the potential and feasibility of Islamic finance and promises immense potential for delivering large ticket deals to the Government for the benefit of the economy. It will also enable the Government to move away from interest-based borrowing and shift towards Shariah-compliant financing as per the requirement of the constitution of Pakistan. The underlying Shariah Structure of the Sukuk is based on Ijarah Sale and Lease Back. Transaction is structured for 10 years, with six monthly profit (rental) payments at a rate equivalent to 6 Month KIBOR -10 bps, as determined through the book building process. The entire issue would be redeemed at maturity i.e. after the completion of 10 years. About Meezan Bank Meezan Bank is the first and largest Islamic bank of Pakistan and the 7th largest bank in the country. With a network of more than 780 branches in more than 230 cities, it has the largest Islamic banking network in Pakistan. Meezan Bank has consistently been recognized as the Best Islamic Bank in Pakistan by numerous local and international institutions, which is a testimony of the Bank’s commitment to excellence. These institutions include Islamic Finance News - Malaysia, Global Finance magazine - New York, Asset AAA - Hong Kong, Asiamoney – Hong Kong, The Banker – United Kingdom, South Asian Federation of Accountants, Islamic Finance Forum of South Asian Awards, Pakistan Banking Awards – Dawn & IBP Pakistan, Employers Federation of Pakistan and CFA Association - Pakistan. The Bank provides a comprehensive range of Islamic banking products and services through a retail banking network of more than 600 branches supported by a countrywide network of over 20 ATMs, Visa & MasterCard Debit cards, a 24/7 Call Center, Internet Banking and Mobile Banking facility. The JCR-VIS Credit Rating Company Limited, an affiliate of Japan Credit Rating Agency, Japan has reaffirmed the Bank’s long-term entity rating of AA+ (Double A Plus) and short-term rating at A1+ (A One Plus) with stable outlook. The rating indicates sound performance indicators of the Bank.