April 02, 2008	Wednesday	Rabi-ul-Awwal 24, 1429

KARACHI, April 1: Pakistan is likely to issue exchangeable bonds in the international market before the fiscal year ends on June 30, instead of planned conventional dollar or Islamic bonds, official and banking sources said on Tuesday.

Pakistan had invited local and international banks to submit proposals for management of a sovereign bond issue in February, but analysts said the deal could struggle because of the country’s volatile politics and the global credit crunch.

“We have been advised by almost all the banks that at this point, an exchangeable bond seems to be the best option,” a senior government official told Reuters requesting anonymity.

An exchangeable bond gives investors the option to exchange the bond for the stock of a company other than the issuer at some future date and under prescribed conditions.

Pakistan has issued an exchangeable bond only once — in 1997, when shares of Pakistan Telecommunication Co Ltd were offered.

This time, shares of the Oil and Gas Development Co Ltd, the country’s biggest listed firm, are likely to be offered, bankers said.

Ashfaque Hasan Khan, special secretary at the Ministry of Finance, said some 16 banks had given presentations on the planned venture in the international capital market.

“They have briefed us on the prospects of issuing a conventional Eurobond, a sukuk as well as exchangeable bonds,” Khan told Reuters.

“But we are yet to decide on which route to take, although a decision in this regard is likely this month,” he said.

However, the first government official said it was almost certain that the government would opt for exchangeable bonds.

“We have been told by the banks that it will be madness on our part to go for a Eurobond or a sukuk at this point, given the tight liquidity globally,” he said.—Reuters