Bank Alfalah has launched an Additional Tier 1 (ADT1) TFC, worth Rs 7 billion at the Pakistan Stock Exchange (PSX). This is the first ever perpetual, ADT1 listed in Pakistan’s stock market.
Bank Alfalah ADT1 TFC launching ceremony was held at PSX yesterday. Governor Sindh, Muhammad Zubair was the chief guest at the event. Chairman PSX, Munir Kamal, Prime Minister Advisory Council Arif Habib, President Bank Alfalah Noman Ansar, addressed the event.
Bank Alfalah’s ADT1 TFC will improve Tier 1 capital base, and help in meeting Basel III requirements. This TFC, currently a market novelty, is the first instance of raising capital through a listed Additional Tier 1 instrument in Pakistan, a positive step in Pakistan’s nascent Debt Capital Market (DCM).
ADT1 TFC will provide profits after every 6 months at the rate of Karachi Interbank offer Rate (KIBOR) plus 1.5 percent. ADT1 instruments, or as they are known internationally – Contingent Convertible bonds (CoCos) – were developed post the 2008 global financial crisis.
This was achieved through a truly participatory instrument with three distinguishing features; perpetual tenor, non-cumulative, discretionary coupon payments and loss absorption. Internationally, ADT1 issuance has swollen to approximately $330 billion. In India, the market is approximately $12 billion.
Governor Sindh Muhammad Zubair told that there is a need to introduce new products in PSX. In the last 4 years, PSX has achieved new milestones and KSE 100 index touched 50,000 points.
“After the elections 2018, Pakistan’s economy will show better facts and figures. Corporate sector progress of Banks, Fertilizer and Manufacturing sector reflects in Stock Market.” Governor Sindh added.