Latest news with #IslamicFinance
Zawya
2 hours ago
- Business
- Zawya
Pakistan signs $4.5bln loans with local banks to ease power sector debt
Pakistan has signed term sheets with 18 commercial banks for a 1.275 trillion Pakistani rupee ($4.50 billion) Islamic finance facility to help pay down mounting debt in its power sector, government officials said on Friday. The government, which owns or controls much of the power infrastructure, is grappling with ballooning 'circular debt', unpaid bills and subsidies, that has choked the sector and weighed on the economy. The liquidity crunch has disrupted supply, discouraged investment and added to fiscal pressure, making it a key focus under Pakistan's $7 billion IMF programme. Finding funds to plug the gap has been a persistent challenge, with limited fiscal space and high-cost legacy debt making resolution efforts more difficult. 'Eighteen commercial banks will provide the loans through Islamic financing,' Khurram Schehzad, adviser to the finance minister, told Reuters. The facility, structured under Islamic principles, is secured at a concessional rate of 3-month KIBOR, the benchmark rate banks use to price loans, minus 0.9%, a formula agreed on by the IMF. "It will be repaid in 24 quarterly instalments over six years," and will not add to public debt, Power Minister Awais Leghari said. Existing liabilities carry higher costs, including late payment surcharges on Independent Power Producers of up to KIBOR plus 4.5%, and older loans ranging slightly above benchmark rates. Meezan Bank, HBL, National Bank of Pakistan and UBL were among the banks participating in the deal. The government expects to allocate 323 billion rupees annually to repay the loan, capped at 1.938 trillion rupees over six years. The agreement also aligns with Pakistan's target of eliminating interest-based banking by 2028, with Islamic finance now comprising about a quarter of total banking assets. ($1 = 283.5000 Pakistani rupees)
Reuters
3 hours ago
- Business
- Reuters
Pakistan signs $4.5 billion loans with local banks to ease power sector debt
KARACHI, June 20 (Reuters) - Pakistan has signed term sheets with 18 commercial banks for a 1.275 trillion Pakistani rupee ($4.50 billion) Islamic finance facility to help pay down mounting debt in its power sector, the power minister said on Friday. The government, which owns or controls much of the power infrastructure, is grappling with ballooning 'circular debt', unpaid bills and subsidies, that has choked the sector and weighed on the economy. The liquidity crunch has disrupted supply, discouraged investment and added to fiscal pressure, making it a key focus under Pakistan's $7 billion IMF programme. Finding funds to plug the gap has been a persistent challenge, with limited fiscal space and high-cost legacy debt making resolution efforts more difficult. 'Eighteen commercial banks will provide these loans through Islamic financing,' Power Minister Awais Leghari told Reuters. 'It will be repaid in 24 quarterly instalments over six years.' The facility, structured under Islamic principles, is secured at a concessional rate of 3-month KIBOR, the benchmark rate banks use to price loans, minus 0.9%, a formula agreed on by the IMF. Leghari said it will not add to public debt. Existing liabilities carry higher costs, including late payment surcharges on Independent Power Producers of up to KIBOR plus 4.5%, and older loans ranging slightly above benchmark rates. Meezan Bank ( opens new tab, HBL ( opens new tab, National Bank of Pakistan ( opens new tab and UBL ( opens new tab were among the banks participating in the deal, he said. The government expects to allocate 323 billion rupees annually to repay the loan, capped at 1.938 trillion rupees over six years. The agreement also aligns with Pakistan's target of eliminating interest-based banking by 2028, with Islamic finance now comprising about a quarter of total banking assets. ($1 = 283.5000 Pakistani rupees)
Zawya
a day ago
- Business
- Zawya
Egypt: Erada Finance launches islamic financing services after securing FRA license
Arab Finance: Erada Finance has launched a suite of Islamic financing services following its receipt of a Sharia-compliant financing license from the Financial Regulatory Authority (FRA), as per an emailed press release. This step positions Erada among the first companies to provide such offerings in the Egyptian market. The launch aligns with the company's strategic plan to broaden its financing solutions and support entrepreneurs and business owners through flexible, technology-driven financial services. The goal is to enhance economic empowerment and contribute to job creation through sustainable financing tools. Erada's Islamic financing is currently offered through two main programs: Murabaha and Investment Agency (Wakala Bil Istithmar). These are part of a wider product portfolio aimed at advancing financial inclusion and catering to the diverse needs of customer segments. © 2020-2023 Arab Finance For Information Technology. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
a day ago
- Business
- Zawya
KIB Invest plays key role in Boubyan's $3bln sukuk issuance
Kuwait International Bank (KIB) Group has announced that its investment arm, KIB Invest, played a key role as a joint lead manager in the issuance of senior unsecured US dollar-denominated sukuk with a five-year maturity, issued by Boubyan Sukuk on behalf of Boubyan Bank. The issuance, structured according to Wakala and Murabaha principles and valued at $500 million, is part of Boubyan Bank's $3 billion Trust Certificate Issuance Program. It garnered strong interest from both regional and international investors, reflecting solid confidence in Kuwait's Islamic financial and banking institutions. The issuance is supported by Boubyan Bank's strong credit ratings from leading global agencies, including an 'A2' rating from Moody's and an 'A' rating from both Standard & Poor's (S&P) and Fitch. Commenting on the occasion, CEO Jamal Al Barrak said: "KIB Invest is pleased to have participated in this successful joint issuance. Our involvement reflects the market's confidence in the sharia-compliant investment instruments, as well as the trust placed in us by investors and stakeholders across both regional and global markets." Al Barrak also highlighted that KIB Invest is strategically advancing its regional and international expansion by actively participating in high-profile transactions. He affirmed the company's commitment to delivering Sharia-compliant investment solutions through a growing platform, supported by a team of experts and aligned with international standards in Islamic finance. Ma'ab Mohammed Al Qassem, the General Manager of International Banking and Financial Institutions at KIB, expressed her appreciation to Boubyan Bank for their confidence in the capabilities and expertise of KIB Invest's team. "The selection of KIB's investment arm for this landmark issuance underscores the strength of relationships among local banks and sets the stage for deeper partnerships within Kuwait's Islamic banking sector," she stated. "This transaction also highlights KIB's ongoing support for local banks and its role in empowering regional financial institutions through strategic partnerships that enhance access to capital markets," she added. Al Qassem further reaffirmed KIB's commitment to fostering the growth of capital markets through innovative, Sharia-compliant solutions designed to deliver strong long-term investment value. The sukuk issuance was jointly arranged by HSBC, Standard Chartered, and Citibank as global coordinators. In addition to KIB Invest, a number of prominent regional financial institutions also participated in managing the issuance, including Arab Banking Corporation, Boubyan Capital Investment Company, KFH Capital Investment Company, Warba Bank, Dubai Islamic Bank, SMBC Bank International, and the Islamic Corporation for the Development of the Private Sector. Copyright 2024 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (
Arab News
2 days ago
- Business
- Arab News
Pakistan raises over $4.2 billion in bond auction, launches first 15-year zero coupon issue
KARACHI: Pakistan raised more than Rs1.2 trillion ($4.2 billion) in a government bond auction on Wednesday, including the launch of its first-ever 15-year zero coupon bond, in a move the finance ministry said marked a shift toward longer-term and more diversified debt instruments. The new zero coupon bond, which does not pay periodic interest but offers a lump sum at maturity, garnered strong investor demand and raised over Rs47 billion ($164.5 million). The instrument is part of the government's broader debt management strategy aimed at reducing short-term refinancing risk, encouraging Islamic finance and expanding the country's long-term investment landscape. 'This is a major step forward in making Pakistan's financial system stronger and more resilient,' the country's finance minister, Muhammad Aurangzeb, said in a statement. 'We are introducing new, smart ways of borrowing that reduce risk and give investors more options,' he added. 'Our aim is to manage public debt responsibly, promote Islamic finance and attract more long-term investment to support the country's economic growth.' The ministry noted the auction saw declining yields across other government securities, reflecting market optimism over moderating inflation and expectations of lower interest rates. It said the average maturity of domestic debt had also risen from 2.7 years to 3.75 years, easing near-term repayment pressure. The ministry noted the investor base was also broadening, with more participation from pension funds and insurance companies in addition to commercial banks. It maintained the diversification helps distribute financial risk and deepen Pakistan's local capital markets. Officials also informed additional savings instruments for ordinary citizens, particularly Shariah-compliant bonds, are in development to foster retail investment and financial inclusion. Despite ongoing global economic uncertainty, the ministry said the auction results reflect renewed investor confidence in Pakistan's economic direction and reform efforts.
