KARACHI: Trading in the privately placed Rs4 billion bond of Soneri Bank Ltd will commence on the Pakistan Stock Exchange on June 7 (Wednesday).
Locally known as a term finance certificate (TFC), the debt instrument will contribute towards the bank’s Tier-II capital, which is the second or supplementary layer of capital that’s less secure than Tier-I capital.
This category of capital includes subordinated debt instruments that provide a bank with a financial cushion in case it needs to liquidate its assets to meet immediate obligations.
The bank will use the funds in its ongoing banking operations, the commercial lender said in the term sheet of the issue.
The bond has a tenor of 10 years with the maturity date of Dec 26, 2032.
The bond will offer a floating rate of six-month Karachi interbank offered rate (Kibor) plus 170 basis points (or 1.7 percentage points) if the bank is compliant with capital adequacy ratio, minimum capital requirement and leverage ratio at the end of a given period.
Only qualified institutional buyers are allowed to trade in the TFC after its listing on the exchange.
As many as 33 companies — including commercial banks, microfinance institutions, pension funds, provident funds, textile mills, insurance companies and energy production firms — participated in the issue that formally took place on Dec 26, 2022.
The largest investors were MCB Bank and United Bank Ltd, which invested Rs600 million (15 per cent) each in the Rs4bn debt instrument. They were followed by HBL Asset Management Company Ltd that invested Rs520m or 13pc of the total bond size.
The market lot on the stock exchange will be one certificate of the face value of Rs100,000 each.
Last year, Soneri Bank exercised the call option with respect to another Rs3bn bond that it issued in July 2015.
In other words, the commercial lender used its right as a debt issuer to “call” or buy back its listed bond prior to maturity.
The earlier bond had a tenor of eight years and paid a mark-up of six-month Kibor plus 1.35pc a year on a semi-annual basis.
Published in Dawn, June 6th, 2023