KARACHI: Credit guarantee provider InfraZamin Pakistan and microfinance institution Kashf Foundation announced on Thursday the closing of South Asia’s inaugural gender bond.

In a gong ceremony at the Pakistan Stock Exchange (PSX), Securities and Exchange Commission of Pakistan (SECP) Chairman Akif Saeed praised the stakeholders for coming up with that debt instrument that helped the microfinance provider raise Rs2.5 billion for onward lending.

Kashf Foundation launched the bond earlier this year along with a full credit guarantee by InfraZamin Pakistan, thereby safeguarding 100 per cent of the principal as well as two interest instalments. More than 30 institutional investors have subscribed to the bond.

This substantial participation from non-banking institutional investors, led by joint lead arrangers Arif Habib Ltd, the Bank of Punjab Ltd, Bank Alfalah Ltd and Standard Chartered Bank Ltd, serves as a positive indicator for Pakistan’s capital market development, an official statement said. The instrument is priced at a three-month Kibor plus a 1.5 percentage-point spread for a three-year tenor. It’ll soon be listed on the PSX.

The gender bond fully subscribes to the Guidelines of Gender Bond Issuance by the SECP, which are based on the UN Sustainable Development Goals and UN Women’s principles for women empowerment.

Recent SECP amendments have also facilitated this risk mitigation by allowing 85pc exemption to non-bank finance companies for exposures against InfraZamin’s guarantees — similar to the State Bank of Pakistan’s exposure exemptions to commercial banks — along with other areas of support for mutual funds as well.

The bond proceeds are expected to boost Kashf’s balance sheet, providing much-needed commercial capital to women from an underprivileged stratum. Kashf’s microfinance lending portfolio will be enhanced to provide finance to 30,000 women from low-income and rural households to develop micro-infrastructure. This will enable them to pursue entrepreneurial aspirations, rehabilitate flood-affected homes, and expand schools and small businesses.

InfraZamin Pakistan CEO Maheen Rahman said enhancing women’s financial capacity, employment and independence is vital for economic progress. “With this gender bond, we have achieved all three.

Published in Dawn, December 1st, 2023