KARACHI: With the focus on financing micro-businesses led by women, Gender Bond will be fully available by the end of July or mid-August — a first for South Asia, said InfraZamin Pakistan Chief Executive Officer (CEO) Maheen Rahman.
The bond, with a maturity period of three years, aims to raise Rs2.5 billion through an initial private placement and subsequent over-the-counter listing, thereby making it accessible to a wide range of capital market participants. This bond benefits from InfraZamin's credit guarantee, covering 100% of the bond's principal amount, as well as a partial guarantee for interest payments.
Talking exclusively to Geo.tv, the CEO said they require some approvals from Securities And Exchange Commission Of Pakistan (SECP).
Although the bond has already been launched and it is in the marketing phase and hopes to complete the subscription by July subject to all requisite approvals from the SECP, she added.
“This is first gender bond in South Asia and perhaps in Middle-East too,” she highlighted. This kind of step has never been taken for women of this region.
The bod initially aims to raise Rs2.5 billion to give small loans to the women of Pakistan on commercial basis, especially ladies in rural areas.
This is commercial based activity so that all the stakeholders benefit and it does not look like a alm-seeking, she expounded, capital market investors will invest as normal investment and will get profit in return.
InfraZamin , a credit guarantee provider, has entered into an agreement with Kashf Foundation, a Section 42 company and a licensed microfinance institution. This collaboration aims to introduce Pakistan's inaugural "Gender Bond" to institutional investors in the capital market.
The "Gender Bond" is a privately placed term finance certificate that will be listed subsequently. The proceeds from this bond will be directed towards empowering women through Kashf Foundation's lending initiatives, specifically focusing on the development of micro-infrastructure.
These infrastructure projects encompass the construction of schools in rural areas, the rehabilitation of flood-damaged homes, and the expansion of micro-businesses led by women.
It has received credit ratings of 'AAA' for the long term and 'A1+' from PACRA, and it is attractively priced at 3-month Kibor (Karachi Interbank Offered Rate) plus a spread of 1.50%.
This pioneering bond will exclusively allocate all its proceeds to Kashf Foundation's microfinance lending portfolio, supporting approximately 30,000 women from low-income households in developing micro-infrastructure.
The bond's proceeds are expected to fortify Kashf Foundation's financial position and provide crucial commercial capital to underprivileged women, enabling them to pursue their entrepreneurial aspirations, rehabilitate homes, and expand schools and small businesses. These lending activities will contribute to the financial independence, capacity building, and overall economic growth and productivity of women in Pakistan.
Recent amendments by the SECP have facilitated risk mitigation by granting an 85% exemption to NBFCs (Non-Banking Financial Companies) for exposures related to InfraZamin's guarantees, similar to the exposure exemptions provided to commercial banks by the State Bank of Pakistan. These amendments also encompass various forms of support for mutual funds.