First Ever Bond Automated Trading System by Bank AlFalah: A Step Towards Healthy Debt Capital Market
First Ever Bond Automated Trading System by Bank AlFalah: A Step Towards Healthy Debt Capital Market: Through the first ever perpetual bonds listed on the stock exchange Bank AlFalah has raised owned by Abu Dhabi Group 7 billion rupees. Pakistan Stock Exchange (PSX) listed the first perpetual term finance certificates (TFC) issued by Bank AlFalah Limited a first step towards development of a healthy debt capital market.
This has improved the bank’s cash adequacy ratio affording with additional capacity to lend Rs.60 billion to the market and would encourage other banks to tap the debt capital market.
- Transactions in the bank’s term finance certificates will take place through bond automated trading system and will be settled on T+1 (Tier-1) basis.
Arif Habib Limited was the market maker to the issue and stated that such instruments were badly needed by the market.
Bank Al-Falah’s TFCs has already been declared as eligible security by the Central Depository Company of Pakistan Limited. National Clearing Company of Pakistan Limited will settle all the transactions.
The instruments offer guaranteed interest of 1.5 percent in addition to Karachi interbank offered rate to be paid on biannual basis.
The additional capital of 7 billion rupees would help the bank meet Basel-III requirements and enable the bank expand and grow. Non-banking financial institutions subscribed to more than 60 % of the issue.
- Managing Director PSX Richard Morin said listing of a perpetual bond was an important milestone as the management aims to develop a resilient debt capital market.
Chairman PSX Munir Kamal said it is the first debt instrument that was classified as Tier-I capital by the State Bank of Pakistan. It is time that other issuers would understand the benefits of debt capital market, and it will help in unlocking the true development potential of the market.