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Dec 13, 1999

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf

Eurobond assigned single 'B' rating

The international ratings organisation Standard & Poor's assigned single-'B'-minus senior unsecured debt rating to new $623m Eurobond issued by Pakistan. The new rating is an improvement from the D ratings given to these bonds in the past.

The new bond, to be issued on Dec 13, '99, replaces $608m of Eurobonds maturing December '99Feb 2002, rated 'D' (default) since Nov 16, '99. The 'D' ratings assigned to these issues have been withdrawn. S & P said the exact issue amount of the new Eurobond may be adjusted slightly after a final calculation of the value of outstanding bonds tendered, the paying agents estimate that investors holding 92% of the face value of the eligible outstanding Eurobonds have accepted The exchange offer.

The foreign currency issuer ratings on Pakistan remain at 'SD' (selective default) pending ratification by bank creditors of a rescheduling of $988m of commercial loans in default since July '98; closure of that default is expected shortly.

SBP starts dollar rupee swap

The State Bank has started providing rupees to the banks in exchange of US dollars as part of its contingency plan to overcome cash problems with banks after a possible rush on deposits provoked by Millennium Bug.

"As a part of the contingency plan to avoid any eventuality of Y2K millennium bug problem the State Bank will provide liquidity comfort to the banks," said a SBP announcement. "For this purpose SBP has decided to operate a USD/ Rupee buy/sell swap window for the local inter-bank market from 8th December, 99 till year-end."

"Banks interested in availing of this facility can enter into swap agreements with the State Bank through this window during the normal banking hours," SBP said.

Millennium Bug as it is called is a possible error that may hit the computer networks at midnight between Dec 31, 1999 and Jan 1, 2000 and make them go berserk and flush out wrong data. This in turn may cause problems in the entire outfit to which the computer network belongs.

All over the world central banks are anticipating a possible rush on bank deposits triggered by fears of the millennium bug even though banks across the globe including those in Pakistan have made themselves immune to the bug.

Senior bankers reached said the State Bank purchased an estimated $13-$18 million from banks at Rs 51.75 per dollar under US dollar/rupee swap for up to Jan 14 on a premium of 25 paisa. This means that SBP would sell back the dollars it purchased from the banks on Dec 8, at Rs 52.00 per dollar on Jan 14,2000.

SBP officials were not available to confirm the estimates of the swap volumes.

Bankers said the $13-$18 million dollar/rupee swap resulted into inflow of Rs 770-Rs 930 million into a cash-starved interbank money market. The State Bank said it would continue to buy dollars in future dates against rupees till year-end but it would not say whether all rupee/dollar swaps would be for Jan 14, 2000.

France backs IMF loan revival

France has actively backed revival of I MF programme of 1998-99 for Pakistan, the resumption of financial support of multilateral agencies and the agreement reached last January by Paris Club for rescheduling of Pakistani debt.

The implementation of this Paris Club agreement through a bilateral convention, which should be signed shortly, represents for France a financial effort of more than 400 million US dollars. It also represents a significant contribution of more than 15 per cent to the total debt rescheduling of Pakistan, French Ambassador Mr Yannick Gerard said Tuesday.

Speaking at the Annual General Meeting of the Pakistan France Business Alliance at a local hotel he said French authorities and firms are confident that this international and bilateral support, as well as the implementation of structural reforms, the restoration of good governance and competent economic management, will enable Pakistan to overcome its present difficulties and to achieve a sustainable GDP growth.

Japan ready to reschedule $ 800m debt

Japan has offered to reschedule $800 million debt under the Paris Club with "slight adjustments" in the interest rates which, according to the Japanese negotiators, is a pre-requisite for the new agreement, sources told.

Rs 23bn rise in tax revenue

The Central Board of Revenue recorded a Rs 23 billion increase in the tax collection upto November 1999 as it collected Rs 125 billion in the 1999-2000 first five months against Rs 102 billion in the same period in 1998-99.

The total direct taxes collection for the July-November period of the current fiscal stood at Rs 34.616 billion. The Sales Tax collection in this period was Rs 43.030 billion. Customs Duty deposits now total Rs 21.590 billion while the Central Excise Duty has contributed Rs 25.751 billion.

The total gross collection in July-November this year stood at Rs 146 billion and a sum of Rs 21 billion refunds were paid out in this period.

Jahangir Siddiqui & Co Ltd.

PACRA has assigned long term rating of AA- (Double A minus) and short term rating of A1+ (A one plus) to Jahangir Siddiqui & Co Ltd. These are the highest local entity ratings assigned to any brokerage house and indicate a very high credit quality. These ratings denote a very strong capacity for timely repayment of financial commitments which is not significantly vulnerable to foreseeable events. The ratings are applicable to the senior unsecured creditors of the company.

IDBP seeks Rs4-5bn to become viable

Maintaining a negative capital base of almost Rs3 billion, the Industrial Development Bank of Pakistan is seeking Rs4 to Rs5 billion capital support from the government to enable it become viable and be back in the business with renewed vigour.

The IDBP wants its equity base enlargement to Rs1.5 billion level as at present the mounting burden of bad loans and the provision requirement under State Bank's prudential regulations has not only wiped off entirely the meagre equity of Rs157 million but converted it into negative Rs2 billion figure.