KARACHI (January 31 2003) : The corporate sector of the country for the first time would see a floatation of a commercial paper to be issued by Packages Ltd, Pakistan's largest maker of packing worth Rs 100 million.
Packages Limited has raised short term funds by issuing a commercial paper for 90 days. Pak Oman Investment has advised, structured and arranged the financing which is the first of its kind in Pakistan, under the guidelines issued by the Securities and Exchange Commission of Pakistan.
The commercial paper can be issued by companies to meet their short term funding requirements at rates that reflect prevailing money market liquidity.
The Packages Commercial Paper introduces new tradable discount instrument that provides a risk premium over treasury bills to investors and funding at significantly lower cost to issuers.
The first issue of Rs 10 million has been issued for 90 days at a very competitive rate.
As primary dealer, Pak Oman will discount the paper in the secondary market and actively promote trading in the instrument.
After the successful launch of this paper, Pak Oman will continue to bring new issues and instruments to the market.
The bonds will carry a return of 83 basis points more than the cut-off yield of 3.42 percent for three month treasury bills, said Ayesha Aziz, head of corporate finance at Pak Oman Investment Co, in Karachi.
Since than the cut-off yield on three months treasury bills fell by 2.39 percentage point to 3.42 percent, six months 2.42 percentage point to 3.95 percent and one year 3.22 percentage point to 3.69 percent.
Rated AA- by Pacra, Packages has always led the way in tapping alternative and innovative funding sources.
It was the first company to issue a listed terms finance certificate in 1995, and issued an unsecured TFC in 2001.
It is also the first company to tap commercial paper as an alternative mode of short term financing.
Standard Chartered Bank is the issuing and paying agent for the transaction.