WAPDA floats first green Eurobond for $500Mn

In a significant development, the Water and Power Development Authority (Wapda) on Thursday launched its first green Eurobond, called Indus bond, for 10 years to raise $500 million at a competitive price of about 7.5 per cent interest rate.

The launch of the bond attracted a number of international investors, who offered Wapda investments worth $3 billion — six times more than its need — through the Indus bond that would formally be launched by Prime Minister Imran Khan in a ceremony scheduled to be held in Islamabad on May 31.

“This kind of willingness shows the belief and confidence the international investors have in Wapda in particular and Pakistan in general,” the authority’s chairman, retired Lt Gen Muzammil Hussain, told Dawn. “This is unprecedented, as I have never seen such a favourable and congenial response for Wapda.”

Out of the nearly $2.2bn that Wapda needs over five years ($1.1bn in the first two years) it is initially raising $500m through the Indus bond. The number of bonds will be gradually increased based on the financial needs of the projects to be funded — Diamer-Bhasha and Mohmand dams.

Indus bond to be formally launched by PM on Monday; foreign investors offer six times more than what is needed

According to Wapda, May 27 was a landmark day for the country due to the launch of its first green Eurobond in the international capital market. It had listed the Indus bond on the London Stock Exchange on Monday.

“The Reg S (Regulation S) 10-year dollar-denominated green bond has been launched at a very competitive price of 7.5 per cent, which is unprecedented given Pakistan’s sovereign bond maturing in 2031 has a coupon of 7.375pc. This will go a long way in diversifying the funding sources for undertaking huge capital-intensive projects. Launching of the debut $500 million Green Eurobond by Wapda is a major achievement wherein a para-statal organisation has accessed the [international] bond market on its own credentials without any financial obligation on the government,” reads a brief report compiled by Wapda.

It further states that there was a tremendous appetite for Wapda’s Indus bond with the order book oversubscribed six times reaching close to $3bn. This included credible and top companies, including Goldman Sachs, Blackrock, Bluebay, Fidelity, Ashmore, Amundi and UBS.

“It is a gold-plated transaction and Wapda appointed top [international] banks led by JP Morgan, who have come back to Pakistan after a hiatus. The co-book runners included Deutsche and Standard Chartered with HBL as co-Manager,” the report adds.

Before the launch, Wapda engaged investors for three days from Monday to Wednesday and released the IPG on Thursday morning for the debut issuance. All three international rating agencies — S&P, Moody’s and Fitch — have given the authority a stable outlook equal to that of the government. “This will become first of the many international bond issues planned for the future and is a strong testament of international investors’ faith in Pakistan’s economic trajectory and Wapda’s sound business model,” the authority’s report says.

The Wapda chairman said the bond would be launched formally by PM Khan on Monday at his office in Islamabad. “It is a matter of great pleasure and honour for Wapda in particular and the state and the people of Pakistan in general,” he added.

Talking to Dawn, Wapda’s Member (Finance) Naveed Asghar said the biggest matter of pride for the authority was that the offers received from the international investment firms were not based on any guarantee sought by the government.

“This clearly reflects the leading investors’ expression of complete confidence on Wapda’s credibility,” he said.

The member added that despite receiving offers, Wapda would not get the $3bn immediately and could require $500m more after around nine months. “At that time, we will launch another bond to raise the required funds,” he explained.