PMRC issues Rs3.1bn sukuk for housing finance

Pakistan Mortgage Refinance Company (PMRC) has issued a first of its kind sukuk of Rs3.1 billion at 8.25 percent for the promotion of housing finance in the country.

According to a press release issued by the company, PMRC and its Partner Financial Institutions (PFIs) have joined hands to strengthen and promote the housing finance market by participating in a Privately Placed sukuk of Rs3.1 billion.

The sukuk was jointly led by Pak Kuwait Investment Company (PKIC) and the Bank of Punjab (BoP). The investors include HBL (Islamic Banking), Askari Commercial Bank (Islamic Banking), Bank Islami, PKIC, BoP (Bank of Punjab), and Karandaaz Pakistan. The sukuk has been structured by Meezan Bank Limited along with PMRC’s Shariah Advisor Mufti Ehsan Waquar and PMRC team. As per the press release, it is the first of its kind and is based on Shirkah-tul-‘Aqd.

The Sukuk has been assigned a AAA Rating (Preliminary) by the Pakistan Credit Rating Agency Limited (PACRA).

According to PMRC, the purpose of this issuance is to utilise the proceeds of this sukuk for further development of shariah compliant housing/ residential mortgage financing as well as Housing Finance Portfolio (HFP) of eligible Islamic Financial Institutions.

While speaking on this occasion, Mudassir H Khan, Managing Director/ CEO PMRC said, “I am delighted to say we have brought innovation in Islamic financing and for the capital markets with this sukuk”. He further said that it would provide opportunities for shariah compliant financing both for consumer as well as the corporate sector. “I feel proud that PMRC is becoming an important player in development of affordable housing finance particularly low-income housing, he added.

While speaking to Business Recorder, Farrukh Zaheer , Head of Treasury and FI said, “Understanding the significant demand of shariah compliant capital market instruments, PMRC partnered with Meezan Bank to structure a Sukuk based on pool of shariah compliant housing finance portfolio. PMRC received an overwhelming response from capital market parricipants. This Sukuk has been issued at profit rate of 8.25% for 3 Years. I am confident this will enable us to promote low and middle income housing and other issuers in capital market. We look forward to issue more instruments of similar or longer tenor to ensure we keep promoting the housing finance sector.”

PMRC expressed their determination to further strengthen the mortgage financing facility for housing in order to promote low cost housing. The company’s Group Head Business and Products, Zulfiqar Alam spoke to Business Recorder and said, “PMRC is providing medium to long term fixed rate financing to Partner Financial Institutions. The financing has enabled them to design and offer fixed rate mortgages up to 20 years, which will not only will create stability for end customer but will also be significant for affordable housing, specially low cost housing. The proceeds from the landmark Sukuk issuance will allow us to further develop long term shariah complaint housing refinance.”

The Bank of Punjab(BOP) has played a very important role in the issuance of this sukuk and is one of the largest participants in the issue. Zafar Masud, President & CEO BOP spoke to Business Recorder on this occasion and said, “Extremely proud to be the Joint Lead Arrangers for one of it’s kind Sukuk offering for PMRC. This will not only help in creating fixed rate Sukuk offering for capital markets but also promote low cost housing, particularly for the borrowers in informal sector, in Pakistan. BOP remains committed to supporting non-conventional initiatives for commercial banks traditionally which are important for country’s, industry’s and bank’s future and long term sustainable growth.”

Pakistan Kuwait (Private) Limited Company (PKIC) is also an important participant in the issue. While speaking to Business Recorder, Mubashar Maqbool, MD PKIC remarked, "PKIC is proud to act as a joint lead arranger of this innovative Shariah compliant financing instrument issued by PMRC to promote the development of affordable housing finance market in Pakistan. Earlier, PKIC also structured and financed Pakistan's first secured fixed-rate mortgage refinance bond of PKR 1 billion issued by PMRC for the same purpose."

Irfan Siddiqi, President and CEO Meezan Bank in his statement said, “Meezan Bank is pleased to partner with PMRC in structuring this new and progressive sukuk for raising Islamic funds”. Siddiqui said he was confident this would greatly contribute towards increasing accessibility and growth in housing finance.

Ahmad Ali Siddiqui of Meezan Bank said this sukuk would be based on one of its kind shariah compliant structure under which the investors and PMRC would enter into Musharakah Agreement to create Musharakah in the Housing Finance Portfolio. “Profits of Musharakah business shall be shared between Sukuk Holder and PMRC as per their ratio of investment. This is a unique structure which will play a pivotal role in the housing sector,” he said.