Benefits of Debt Listing

-Access to large pools of capital:

A public issuance of debt securities provides issuers with access to large pools of funds through the numerous investors who invest in listed instruments.

-No dilution:

By listing bonds of a company to raise capital, the equity of the company is not diluted.

-Increased liquidity

The liquidity created by listing debt securities enables companies to raise long term debt securities as individual investors may exit when they require cash flow. Listed debt securities therefore are issued at a lower interest rate as liquidity risk is significantly reduced.

Types of debt listings:

Private placement

-Eligibility criteria for listing:

A company may apply for listing of its debt securities offered and issued to QIBs throughprivate placement under Chapter 5C of PSX Regulations, provided that:

1. it is a public company;
2. it is authorized by it memorandum of association or other constitutive document to issue the debt security;
3. its paid up capital is not less than Rs.25 million;
4. the total issue size is not less than Rs.25 million;
5. in case of a listed company, none of its securities is on the defaulters’ segment of the Exchange;
6. none of its controlling directors, sponsors, or promoters is defaulter of the Exchange;
7. none of its controlling directors, sponsors, or promoters is also the controlling director, promoter, or sponsor in other listed companies, which are in the defaulter segment or which has been delisted by the Exchange;
8. neither the company nor any of its promoters, sponsors or directors has any overdue loan of any financial institution. Provided that this condition shall not apply to nominee directors of the Government and Financial Institutions.
9. neither the company nor any of its associated companies is defaulter on payment of profit or repayment of principle amount on any debt security earlier listed on the Exchange.
10. the debt security is redeemable, if issued under section 66 of the Companies Act.

[Explanation No. 1: An instrument in the nature of redeemable capital may have the conversion option i.e. the option of conversion into ordinary shares of the issuer.]

[Explanation No. 2: This clause (x) shall not apply to an issue of perpetual debenture or any other perpetual debt security.]

-Listing procedure:

For listing of a debt security, the following procedure shall be followed:

1. The company shall make the offer of such debt security to QIBs only through an information memorandum.
2. The company, after finalization of the list of subscribers shall make an application to the Exchange on Form-I for listing of its debt security along with the documents and information as mentioned in Annexure-I of the Regulations.
3. The Exchange may reject any application for listing of a debt security at its sole discretion if it deems that listing of the debt security is not in the interest of the market, the company does not meet the minimum eligibility criteria set out in Chapter 5C of PSX Regulations or the company is in contravention of any provision of the said Chapter.Provided that the company shall be given an opportunity of hearing by the Exchange before the listing application is rejected.

-Payment of listing fees:

A company applying for listing of its debt security under Chapter 5C of PSX Regulations shall pay to the Exchange an initial and annual listing fee at the rate as mentioned below:

1. an initial listing fee equivalent to 0.025% of the total issue size of the debt security subject to a maximum of Rs.0.2 million; and
2. an annual listing fee of Rs.30,000/- shall be payable in respect of each financial year of the Exchange, commencing from 1st July and ending on 30th June next, before the 30th September in each calendar year.

-Resources and tools-listings- debt securities

Long term Debt Instruments

-Eligibility for listing:

Any Issuer may apply for listing of its Debt Securities offered to the General Public under chapter 5B of the PSX Regulations provided it fulfills the following criteria:

• (a) it has commenced commercial operations;
• (b) it is allowed by the Commission to issue, circulate and publish prospectus for issue of such Debt Security;
• (c) its paid up capital is not less than Rs. 200 million and the total issue size including pre-IPO placement if any, is not less than Rs. 200 million;
• (d) its entity rating and the instrument rating is not less than BBB. Instrument rating in case of Short Term instruments may not be required;
• (e) any of its Securities is not on the Defaulter’s Segment of the Exchange, if it is already listed;
• (f) it and its sponsors and directors has/have no overdue loans of any bank or financial institution.

-Conditions for listing of debt securities:

The Issuer that intends to list any of its Debt Securities on the Exchange shall comply with the following conditions: Minimum allocation of capital to the General Public excluding the Pre-IPO investors shall be as under:

1. in case issue size is up to Rs. 500 million, the allocation of capital to the General Public shall not be less than Rs. 100 million or 25% of the issue size, whichever is higher;
2. in case issue size is above Rs. 500 million and up to Rs. 2 billion, the allocation of capital to the General Public shall not be less than Rs. 125 million or 15% of the issue size, whichever is higher;
3. in case issue size is above Rs. 2 billion and up to Rs. 10 billion, the allocation of capital to the General Public shall not be less than Rs. 300 million or 10% of the issue size, whichever is higher;
4. in case issue size is above Rs. 10 billion, the allocation of capital to the General Public shall not be less than Rs. 1,000 million or 5% of the issue size, whichever is higher. The Exchange, while keeping in view appetite for the Debt Securities being offered, may change the above allocation in any manner it may deem fit.

-Procedure for Listing Of Debt Securities

For listing of Debt Securities under chapter 5B of the PSX Regulations following procedure shall be followed:

The Issuer shall for listing of any of its Debt Securities, make an application on Form-A to the Exchange along with the documents/information as mentioned
in Annexure-I.

The Issuer shall pay an initial listing fee of such amount as mentioned in regulation 5B.9.

-Trading in Debt Securities:

Trading in Debt Securities listed under chapter 5B of the PSX Regulations shall commence one day after the date of their formal listing;

The Debt Securities shall be traded at the Exchange’s Bond Automated Trading System (BATS);

Appointment of Market Maker and Compliance Officer:

The Issuer is required to appoint Market Maker and Compliance Officer, who shall be responsible to their respective functions as laid down in under the relevant Regulations

-Payment of Listing Fee:

The Issuer shall pay to the Exchange initial listing fee and annual listing fee at the rate as mentioned below:

1. an initial listing fee equivalent to 0.05% of the total issue size of the Debt Security subject to a maximum of Rs. 0.5 million.
2. an annual listing fee shall be payable in respect of each financial year of the Exchange, commencing from 1st July and ending on 30th June next, before the 30th September in each calendar year, as per following schedule: S. No. Total Issue Size and Amount of fee i. Up to Rs. 500 million Rs. 30,000/- ii. Above Rs. 500 million & up to Rs.1000 million Rs. 40,000/- iii. Above Rs. 1000 million Rs. 50,000/- The Exchange with prior written approval of the Commission may revise the above mentioned initial and annual listing fees.

-Brokerage Commission:

The brokerage commission under the public offer shall be payable to the TRE Certificate Holders of the Exchange at the rate of 0.25 percent of the value of debt security actually sold through them.

Resources and Tools-listings

Short term Debt Instruments

-Introduction

The Exchange will list the short - term debt instruments in the form of a short term finance certificate issued by the listed companies as well as non - listed companies. There is no compulsory requirement of public offering where the debt instrument is issued for a maximum period of 365 days and its size is upto Rs. 100 million. The public offering where required shall be at least Rs. 200 million or 20% of the total issue size, whichever is lower.

-Fee Schedule

1. Initial Listing fee : The initial listing fee shall be charged at the rate of one twentieth of one percent of the total issue size, subject to a maximum of Rs.0.5 million.
2. Annual Listing Fee: The annual listing fee shall be payable as per the Slabs of fee given here under: Size of Instrument Up to Rs.150 million, Rs. 30,000. Above Rs.150 million & up to Rs.500 million, Rs. 40,000. Above Rs. 500 million, Rs. 50,000.
3. Brokerage Commission: The brokerage commission under the public offer shall be payable to the TRE Certificate Holders of the Exchange at the rate of 0.25 percent of the value of debt instrument actually sold through them.

-Resources and Tools-listings

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