Total addressable market for the sale of sovereign bond in Pakistan is estimated to be as high as Rs500 billion.  By launching new investment instrument Government hopes to attract the excess money from the market that is not finding any productive outlet.

Savings bond will be sold through the network of the Central Directorate of National Savings and will be traded in the capital market.

Because of the lack of investment opportunities, experts feel that the prospective share price per unit of the government bond will higher than its face value.

The administration of Karachi, Lahore and Islamabad stock exchanges and the Security Exchange Commission of Pakistan have already received the draft rules and have very short window for comments.

General Manager of the Karachi Stock Exchange Haroon Askari was quoted in Dawn saying these bonds can “change fundamentals of our marketplace”.

Government backed bond will be ‘deemed listed’, which means that it will avoid the arduous procedure of application for listing and public offer before making its way to the market.

Government officials say they are actively pursuing the move to meet Pakistan’s budgetary demands.

As recipient of IMF loan, Pakistan is prohibited from the State Bank borrowing beyond certain limits. The World Bank and the ADB have also pressured Pakistani government to introduce investment opportunities and raise resources from market at competitive rates.

If this bond is ‘deemed listed’ next week, it will qualify Pakistan for the last tranche of $200 million under the ADB Accelerated Economic Transformation Project (AETP). Pakistan has been assured that the amount would be disbursed as soon as the bond is introduced during the current month.