KARACHI, July 3: As many as 17 Term Finance Certificates (TFCs) worth Rs10 billion were issued during financial year 2002, taking the total value of Pakistan’s listed private debt (TFC) market to Rs19 billion.

Study prepared by Mohammed Sohail, head of research at InvestCap shows that performance of primary TFC market in financial year ended June 30, 2002, was the best so far, since 10 companies had offered the debt instrument of Rs5.5 billion in FY01 while only four TFCs of Rs1 billion were floated in financial year 2000.

“Currently, there are 35 outstanding TFCs worth around Rs19 billion, which amount to 4.5 per cent of market capitalization of the Karachi Stock Exchange,” says analyst, adding that five TFCs of more than Rs2 billion in value have already matured. The unlisted TFCs are a separate matter.

Declining interest rates (6-month T-Bill rate came down to 6 per cent), coupled with growing awareness was stated to have made the TFC market attractive during FY02. Moreover, the entry of big banks into the advisory and arranging business had also positively contributed to the development of TFC’s primary market.

With so many more issues such as those of Engro, NDLC, Orix Leasing, Crescent Leasing, MCB, White Oil Pipeline, Quetta Textile, Maple Leaf Cement in the pipeline, analyst expects the size of listed TFC market to burgeon to Rs25 billion by the close of FY03.

The impediments to the growth of private debt market were considered to be the non-existence of TFC’s secondary market; a small investor base and lack of awareness of its pricing.