UBL : DEBT AND CAPITAL MARKETS

Posted by iftikhar ahmed

April 17, 2009

Loan Syndication

	Raising term financing from financial institutions
	Can be used to raise large financing amount
	Results in the use of bank lines by the corporation
	Plain vanilla product
	Advantage of bilateral-type operation as primary interface is with the Agent Bank only.
	IBG acts as an Advisor, Arranger and/or Trustee of the loan facility

TFC

Redeemable capital issued under section 120 of the Companies Ordinance, 1984

Capital market alternative to traditional bank debt

Replicates the cash flows of a coupon-bearing bond

First TFC in Pakistan issued by Packages Limited in 1995

Two types of TFCs are:

	Listed TFCs
	Privately-Placed TFCs

IBG acts as an Arranger and Structuring Agent and Trustee

Listed TFC

		Listed TFCs are made available to the general public in addition to institutional investors through listing on the stock exchange
		Facilitate trading in the secondary market
		Offered through both Private Placement (Pre-IPO) and Initial Public Offer (IPO)
		Listing creates liquidity through bid and offer quotes in the secondary market
		Increasingly growing with 14 companies offering TFCs worth PKR 16.8 billion at the Karachi Stock Exchange alone in 2005. This trend also continued in the year 2006 and UBL IBG had significant market share of listed TFC issues in 2006

Privately Placed TFC

	Privately-Placed TFCs are not offered to the public
	Offered to a single principal investor or to a group of institutional Investors, allowed under Section 120 of the Companies Ordinance, 1984
	Arranging a Privately-Placed TFC issue takes considerably less time. Can be achieved in a matter of 4-8 weeks
	Approvals are not required from regulatory authorities (stock exchanges, SECP) and the credit-rating of the entity and instrument need not be obtained

Securitization

Securitization designed to improve the risk profile of the facility for the Issuer

IBG acts as Structuring Agent and Arranger

Asset Backed Securitization (ABS)

	Bonds or notes backed by financial assets
	Pools of financial assets are sold to SPV
	SPV converts these pools to marketable securities in the form of Asset Backed Securities

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