By Josie Cox
The Islamic Republic of Pakistan is preparing to price a
Shariah-compliant bond as early as Wednesday, tapping into a
growing investor base for the product, even beyond the Muslim
world.
Representatives of the country started meeting investors on
Monday in Abu Dhabi and Dubai, before moving to London on
Tuesday.
A spokesman for one of the banks involved in the deal said the
bonds, which have a maturity of five years, could price as early as
Wednesday.
The so-called sukuk bonds, are being marketed by bankers from
Deutsche Bank, Citigroup, Standard Chartered and Dubai Islamic
Bank, with yield guidance in the 6.875% area, the spokesman
said.
Pakistan follows a number of other countries, like South Africa,
Senegal, the U.K. and Luxembourg, which have issued sukuk bonds in
recent months, taking advantage of a fledgling investor base.
Sukuk paper trades, clears, settles and is rated in a similar
way to non-Sharia compliant bonds, but is structured to abide by
Islamic law. This means it is usually backed by assets or cash flow
as the religion bans interest payments. As a result of this, sukuk
issuers are able to tap a different pool of investors than with
more conventional bonds.
Tunisia and Kenya are also both rumored to be eyeing the market,
according to investor sources.
Moody's Investors Service, a major bond credit rating business,
has said that it would rate the Pakistan's sukuk debt Caa1.
Write to Josie Cox at josie.cox@wsj.com
