The Pakistan’s Government will guarantee 100 billion rupees ($955 million) worth of Islamic bonds to fund what would become 4th greatest hydropower plant of country, targeting to deal power shortages that have become a huge problem for the Pakistan’s economic progress.
The deal would be considered as one of greatest infrastructure sukuk sold to date, assisting to expand a funding format that has highly been confined to handling mid-sized deals with shorter tenors.
The ten year sukuk, to be privately placed and held by the Neelum Jhelum Hydropower Company (Private) Limited, was offered a preliminary AAA rating by credit rating agency JCR-VIS with a balanced stable outlook.
The rating will be finalized upon the consideration of legal documents and the issuance of the government guarantee, which will review the issuance amount and profit payments, JCR-VIS claimed in a statement.
Unlike traditional bonds, sukuk are the intended investment certificates which follow religious rules that forbid and refrain from interest payments, rather paying returns connected to an underlying asset.
The total cost of the project is predicated at 404 billion rupees, with nearly 3 quarters of that being funded via debt.
The plant would produce 969 MW of power adding nearly 5% to the country’s entire installed power generation capacity, with the 1st generating unit hoped to begin operation in the year of mid 2017.
Infrastructure sukuk have been slow, partly because they mostly need the transfer of assets into particular purpose vehicles, which can be really difficult for legislative or political reasons when it comes to major state projects.