KARACHI (February 24 2003) : Husnain Cotex Ltd is likely to issue a commercial paper worth Rs 315 million by next month. The interest rates will be linked to six months treasury bill rates.
The maturity of commercial paper will range from 90 days, 180 days and 360 days with interest to be linked to six-month treasury bills, a source in the corporate sector said.
Following the cut in lending rate in November 16, 2002 to 7.5 percent a record low since last fiscal year, three month, six-month and one-year treasury bills rates fell.
At present the rate on three-month treasury bill is 3.19 percent, six-month 3.36 percent and one-year 3.60 percent.
It will be the second commercial paper in the corporate world of the country after Packages Ltd, issued last month worth Rs 150 million arranged and advised by Pak Oman Investment Co.
The company because of general economic recession and increased competition from government agencies, contract revenues declined during the last two fiscal years – a trend appears to have reversed in the first half of 2002-2003 with six months revenues registering an annualised growth of 18 percent over 2001-2002.
This has helped the company maintain nominal debt leverage over the past three years with currently zero interest bearing borrowings.
Husnain has planned to launch a commercial paper issue. JCR-VIS Credit Rating has assigned a medium to long-term rating of A- (Single A minus) and a short-term entity rating of A-2 (single A two).
These ratings are predicated on 35 years experience of Husnain's management in construction and contracting.
Having successfully executed major projects in construction including mega infrastructure projects worth Rs 8 billion over the last five years, the company has built a large equity base.