Prevailing uncertainty in the international bond market due to Greece debt has delayed the launching of the Oil and Gas Development Company Limited (OGDCL) exchangeable bonds till September. An official source said that the decision was made on the suggestion of financial advisors, who have asked to wait till the situation improves in the international market. “Floating is not possible in August as it is summer holidays season,” sources added.
The volatile situation in the international financial market due to the Greece crisis has already delayed the transaction from June, this year. This transaction would be launched at a suitable time when the markets recover, the source said adding that 19 countries including India, China and Korea have held road shows for their exchangeable bonds but were waiting for conditions to improve. Pakistan would only venture forth if some AA rated country opts for the international bond market. If OGDCL bond would be sold in the international market at 15 percent minimum premium, then bond price would be Rs172, he said.
Currently OGDCL share is traded at Rs154 per share in the local market. He was confident that OGDCL bond would cross Rs200 in 2 years time after floatation of bonds in the international bond market. The biggest advantage of selling off bonds in the international bond market, he said would be the acquisition of $500 million loan against 10 percent OGDCL bonds. He said Pakistan would be able to pay off the loan within two to three months.
The country would pay interest at the rate of 5 to 6 per cent per month for 3 to 5 years according to the agreement. He said government would never float bonds at a give away price as OGDCL is a national asset. Earlier the deadline was June 30th to float OGDCL bonds but now given that there is no deadline government is hoping to sell OGDCL bonds at a convincing price. At present the world market is trying to recover from the recession which has made privatization commission wary about the privatization process he added. The decision of selling off OGDCL 10 per cent bonds in the international bond market was taken in March last year and it was decided to float the bonds by June 30th. The government could not meet its earlier commitment and thus decided to put this process on hold conditions in the world market are more favourable.
