Trading in Soneri’s Rs4bn bond to begin tomorrow

Trading in the privately placed Rs4 billion bond of Soneri Bank Ltd will commence on the Pakistan Stock Exchange on June 7 (Wednesday). Locally known as a term finance certificate (TFC), the debt instrument will contribute towards the bank’s Tier-II capital, which is the second or supplementary layer of capital that’s less secure than Tier-I capital. This category of capital includes subordinated debt instruments that provide a bank with a financial cushion in case it needs to liquidate its assets to meet immediate obligations. The bank will use the funds in its ongoing banking operations, the commercial lender said in the term sheet of the issue. The bond has a tenor of 10 years with the maturity date of Dec 26, 2032. The bond will offer a floating rate of six-month Karachi interbank offered rate (Kibor) plus 170 basis points (or 1.7 percentage points) if the bank is compliant with capital adequacy ratio, minimum capital requirement and leverage ratio at the end of a given period.