960420

Govt wants firm

offers from banks

for PTCL loan

RECORDER REPORT

ISLAMABAD: The Government has asked the banks to give fresh offers for a $200 million loan to be raised against securitization of Pakistan Telecommunication Corporation Limited international net settlement payments, not on 'best effort' basis but with a firm underwriting commitment as an assurance that the funds will form part of the country's reserve position by end June '95.

At a meeting held at the Ministry of Finance, chaired by Joint Secretary, External Finance, Javed Noel, alongwith PTCL Finance Director Ghaznavi and Privatization Commission Advisor Zubair Aijaz, with some of the competing institutions for the deal, it was decided that fresh underwritten offers be invited since most of the offerers were confident that PTCL would make it to BBB investment grade and that securitization of PTCL forex receivables was the most efficient way to obtain funds without increasing the country's debt profile.

Besides cost, the most important aspect that the authorities would need to examine is the track record and delivery capability of the underwriting institution. The mechanism is not regarded as completely water tight and there is always some kind of an escape clause relating to "material adverse change". As such, the ability of a bank to cough up $200 million within the limited time frame is a sine qua non, say securitization experts.

New invitations are expected to be issued by Monday for banks to go back to their respective head offices and make firm offers before the end of this week.

The success of the exercise is once again dependent on the keenness on the part of PTCL officials to complete the documentation process in time and obtain a positive pledge. At the moment, if appears that the Ministry of Finance is more serious about obtaining the long-term loan and PTCL feels quite contented with past practice of obtaining subsidized forex loans backed by government guarantee.

According to knowledgeable sources ABN Amro Bank has made a bridge loan offer with underwriting commitment to ensure BBB investment grade rating for PTCL securitization of forex receivables.