Coupon reset after every 3 months: Govt plans to launch 3-year floating rate PIBs

ISLAMABAD: Abdul Rehman Warraich, CFA, DG Debt, Ministry of Finance Tuesday announced that the government plans to launch 3-year floating rate Pakistan Investment Bonds with unique feature of coupons/profit reset after every 3 months.

These bonds will be issued in addition to the current floating rate bonds with 6 months coupon reset. He made the announcement while addressing financial market professionals at a webinar organized by CFA Society Pakistan. President, CFA Society Pakistan, Muhammad Asim appreciated the new instruments which have contributed to market development. Availability of these instruments help meet investors demand for government securities with more frequent profit resetting which are in line with the direction of interest rates.

DG debt while speaking to the members of CFA Society Pakistan, shared that the Ministry of Finance has been focusing on improving the debt profile and extending the maturity of government securities. In a short span of one year the debt office has increased the maturity from 1.5 years at the end of FY 19 to 2.7 years, while it aims to extend the maturity further to 4 years going forward.

During the FY20, Government raised about Rs. 2,715 billion through various instruments including about Rs 1,832 raised through longer term Pakistan Investment Bonds. At occasion, DG Debt, Abdul Rehman Warraich shared the plans to focus on issuance of Sukuk and to grow the share of government Sukuk from 2 percent in FY20 to 10 percent by the end of FY23, which will also help support the growth of Islamic Financing Institutions.-PR

Copyright Business Recorder, 2020