Pak diaspora bond launch on Jan 31

ISLAMABAD: The government is set to launch a dollar-denominated diaspora bond - Pakistan Banao Certificate (PBC) - on Jan 31 to tap into the international savings of overseas Pakistanis for building foreign exchange reserves, reports the Dawn.
Finance Minister Asad Umar told the Dawn that the certificates would be of two maturities - one of three years at about 6.25pc return and another with five-year maturity carrying 6.75pc return. Four banks had been selected to complete the transactions, he added.
Another official said the PBC would be launched worldwide jointly by the government and the State Bank of Pakistan. The rules governing the certificates were approved by the federal cabinet on Thursday because it was the first ever transaction of its nature that targeted only overseas Pakistanis.
"It will be an open-ended transaction and its size would depend on the response from Pakistanis abroad," the official said adding that while the transaction would build reserves, the country's balance of payments needs for the current year have already been secured. "Obviously we have some numbers in mind which could not be disclosed until the D-day," he responded to another query.
"We don't need to go for any other international capital market transaction this fiscal year," the official commented when asked about $2.5-3 billion Eurobond or Islamic Sukuk launch in the international capital markets budgeted for the year.
Another official said that international markets needed an endorsement from the International Monetary Fund (IMF) which was elusive at this stage and hence the transaction could be expensive.
He said the first $1.0 billion tranche from the UAE out of $3.0 billion commitment had been received along with the final $1.0 billion instalment of Saudi Arabia's $3.0bn promise already credited into the SBP account on Friday.
Due for immediate payment in April this year are about $1.0bn bond acquired by the previous government five years ago.
Officials claimed that PBCs offer more attractive returns than those available to Pakistanis abroad on instruments of similar maturity. The certificates are backed by sovereign guarantee. Responding to a question, the official said PBC would not adversely affect normal remittances from overseas Pakistanis.