Pakistan Banao certificates

[El Sidd]

If state companies like PIA are semi-privatised with an ownership structure of 51% govt owned -49% owned by public that would attract lots of investment and in turn make the company stronger. Companies like PIA are sleeping giants, so much potential but corruption has impaired that golden hen

Golden Era not Golden Hen.

Patience.

Pakistan needs to first do something about its undocumented dark economy

 

[fitpOsitive]

Offer us profit on our investments, we will invest. Enough with chanda politics.

 

[Hareeb]

So basically they are taking loans from overseas Pakistanis with a 5% interest rate...?

Bond certificates (could be traded as financial derivatives).

Depending on when it's launched i'd be tempted to go for 3 year version. No guaruntee who the next govt will be and if you'll ever see your money again.

Currently $5000 is about £3800.

Can anyone calculate how much you should expect to see back from that?

@6.25 semi-annual interest, $5000 will be nearly equal to $7193 after 3 years i.e. earning of $2193 after 3 years.

@6.75 semi-annual interest, $5000 will be nearly $9605 after 5 years i.e. earning of $4605 after 5 years.

Anyhow tell me. What advantages apart from the 5.5 increase in investment are there for this legal document furnished by the GOP.

-Legally protected.
-Liquid.
-High interest.
-Diversification of investment.
-Risk hedging.
-Non volatile unlike stocks.
-Save investment with soverign guarantees just like T-bills.

 

[VCheng]

Nothing is mentioned about it, they just setup website with few pages.

It seems like a pretty amateur job thus far, but maybe they will get their act together given some more time.

 

[Zulfiqar]

@6.25 semi-annual interest, $5000 will be nearly equal to $7193 after 3 years i.e. earning of $2193 after 3 years.

@6.75 semi-annual interest, $5000 will be nearly $9605 after 5 years i.e. earning of $4605 after 5 years.

I believe the interest rate quoted is annual 6.25 percent per annum. Half of the coupon/interest will be paid after every six months.

Considering the current LIBOR it would be foolish to float a bond with a 6.25 percent profit per 6 months.

 

[Hareeb]

I believe the interest rate quoted is annual 6.25 percent per annum. Half of the coupon/interest will be paid after every six months.

Considering the current LIBOR it would be foolish to float a bond with a 6.25 percent profit per 6 months.

Nope according to SBP, its a 6.25% bi-annual interest per annum for 3-year bond and 6.75% bi-annual interest per annum for 5-year bond.
In US, normally the bi-annual interest rate is between 2%-3%.

 

[Syed1.]

Nope according to SBP, its a 6.25% bi-annual interest per annum for 3-year bond and 6.75% bi-annual interest per annum for 5-year bond.
In US, normally the bi-annual interest rate is between 2%-3%.

The interest is not bi-annual, the payout is bi-annual.

 

[Menace2Society]

Overseas Pakistanis demand this money is spent on cleaning the cities and implmentation of waste management before money is spent anywhere else.

I don't care if you are poor just stop being dirty. Clean the country and the world will notice you are different from India.

 

[ghazi52]

 

[Hareeb]

The interest is not bi-annual, the payout is bi-annual.

Interest could be paid bi-annually/monthly/weekly- and compounding makes sum of 2 semi-annual interests more than the annual interest.

 

[valkyr_96]

They want to attract new money from expats. I wonder what is the risk rating for these certificates and whether they are FDIC insured?

Does FDIC insure securities?

 

[VCheng]

Does FDIC insure securities?

I think it is the SIPC and not FDIC, and only if the brokerage firm is a member, but I am not sure, hence the question I asked.

 

[valkyr_96]

https://www.pakistanbanaocertificates.gov.pk/default

Looks like government is not interested to issue certificates to people like me who are already keeping money in Forex Account in Pakistan

If your bank has a wholesale branch, it might be possible if the bank itself is willing to accommodate. You may inquire. Although Pakistani Eurobonds and Sukuk Issues explicitly bar domestic residents from investing in the securities, these are saving certificates like the special saving certificates and defence saving certificates. This is the reason why there is no Advisor/ Arranger, no prospectus or rating.

It is quite an odd offer because because unlike in the case of the saving certificates, Pakistan does not print dollars. Thus there is an element of sovereign risk (pricing it or not is in itself a controversial issue). Pakistan benefits from the savings against its Eurobonds (if floated) which have a 7.875% to 8.25%.

 

[valkyr_96]

I think it is the SIPC and not FDIC, and only if the brokerage firm is a member, but I am not sure, hence the question I asked.

Neither SIPC nor FDIC insures you against an investment decision made by you, the investor. No country in the world protects you from losses on your investments. Retail issues (rare) require excessive disclosures and listing, therefore most bond issues are privately placed and issued to Qualified Institutional Buyers. Distressed sovereign Bonds do get restructured. FYI, SIPC protects your account with the brokerage firm if it goes under since it also plays the important role of a market maker and is thus exposed to the market forces as any other investor. <-No such thing exists in Pakistan, however we have the Central Depository Company which protects us in a similar situation.

 

[VCheng]

Neither SIPC nor FDIC insures you against an investment decision made by you, the investor. No country in the world protects you from losses on your investments. Retail issues (rare) require excessive disclosures and listing, therefore most bond issues are privately placed and issued to Qualified Institutional Buyers. Distressed sovereign Bonds do get restructured. FYI, SIPC protects your account with the brokerage firm if it goes under since it also plays the important role of a market maker and is thus exposed to the market forces as any other investor. <-No such thing exists in Pakistan, however we have the Central Depository Company which protects us in a similar situation.

But surely there is a way to judge the risk associated with any investment such as these certificates. Is there another mechanism, or rating, that might help a potential investor?