May 07, 2008	Wednesday	Jamadi-ul-Awwal 1, 1429

KARACHI, May 6: Pakistan has put on hold plans to issue an exchangeable bond with an option for shares in Oil and Gas Development Co Ltd, the country’s largest-listed firm, a senior finance ministry official said on Tuesday.

“OGDCL has been put on hold for the time being and the reason is that the new coalition, they are still working on this area,” said Ashfaque Hasan Khan, special secretary at the Finance Ministry, told Reuters.

The government holds an 85 per cent stake in OGDCL. Launch of the issue, to be jointly managed by ABN AMRO, Barclays and JPMorgan, had been expected before June 30.

In April, OGDCL posted nine-month profits of Rs36.25 billion, up 4.7 per cent from year ago levels, thanks to surging oil prices and rising production.

Pakistan is also taking a wait-and-see approach on a sovereign bond issue, Mr Khan said.

Pakistan’s sovereign bond spreads widened after the assassination of Benazir Bhutto in late December, and because of the campaign of violence waged by militants, and political uncertainty ahead of a general election on Feb. 18.

Mr Khan expressed disappointment that spreads failed to narrow after the election.

The polls were fairer and more peaceful than many people feared, and the subsequent coalition partnership between the two largest mainstream parties raised hopes that the nuclear-armed state would be less prone to political instability.

“We are also surprised that spreads did not come down, even after free and fair elections and (establishment of a) stable government in Pakistan,” Mr Khan told Reuters.

On Tuesday, Pakistani 5-year credit default swaps insurance-like contracts that protect against defaults or restructuring — were quoted at 425/550 basis points.

That would mean investors would spend between $425,000 and $550,000 per year to insure $10 million of Pakistani debt for five years.

Pakistan last tapped international capital markets in May 2007, when it sold $750 million worth of 10-year bonds in a deal that was seven times oversubscribed with a total demand of $3.5 billion.—Reuters