KARACHI: The Pakistani prime minister’s advisor on finance, Dr. Abdul Hafeez Shaikh, said on Monday that Pakistan’s economic relationship with Saudi Arabia was intact and was impervious to “ups and downs.”

Shaikh was speaking to media after a ceremony held at the Pakistan Stock Exchange (PSX) to mark the book building and listing of state-owned Power Holding Limited’s (PHL) Rs200 billion Pakistan Energy Sukuk II (PES II). 

“The relationship between Pakistan and Saudi Arabia are historical and excellent. They have always supported Pakistan whenever needed and we also reciprocated the way it ought to be,” the finance chief said. “These are two big and important countries and have good economic relationship that is intact by every means and no ups and downs are going to happen to this relationship.”

The book building process of PSE II, managed by Pakistan Stock Exchange, was concluded on May 19, 2020. The listing of the Sukuk took place on July 28, 2020. The gong striking ceremony on Monday was held to formally mark the first ever debt issuance through book building and listing of the said debt issue (PES II) at the Exchange.  

“For the first time the government raised Rs 200 billion through Sukuk at less than KIBOR (Karachi Inter-Bank Offered Rate) rate, through competitive book building at PSX, saving Rs 18 billion over 10 years of debt servicing,” Shaikh said, adding that it was "excellent team effort" by the Ministry of Finance Debt Office, the Securities and Exchange Commission of Pakistan, the central bank and PSX.

Power Holding Limited’s Pakistan Energy Sukuk II is a Shariah-compliant debt instrument which was issued through a competitive book building process managed by PSX and has 10-year maturity with semi-annual profit payments for investors. It is a 100 percent Statutory Liquidity Requirement (SLR) eligible government guaranteed security.  

The book building and listing process allowed for competitive price discovery and attracted a large number of investors, being oversubscribed by 70% or by about Rs139 billion against the targeted amount of Rs 200 billion.  

Farrukh Khan, CEO PSX, said he hoped the instrument listing at the bourse would provide an attractive investment avenue for companies and investors.  

“It sets a precedence for other debt listings to engage in the state-of-the-art competitive book building managed by the Stock Exchange, which will enable GOP and private companies to raise capital at the most competitive cost, while providing attractive investment opportunities to investors,” Khan said.

Market participants say the successful handling of such a huge transaction would open the way for more such transactions, including under the $60 billion China-Pakistan Economic Corridor of infrastructure and energy projects. 

“Raising Rs200 billion from Pakistan stock exchange and accomplishment of the transaction will usher in lot of more transactions and we may need such transactions for CPEC in the future," Muhammad Farid Alam, CEO of AKD Securities said.