Published: February 6, 2012

KARACHI: A debt-swap deal with a size of Rs 136 to Rs 138 billion is likely to be finalised within a day or two to provide a balance sheet relief to IPPs and OMCs ahead of second quarter.

According to stock market sources on Monday, the total size of the swap has been slashed from Rs 144 billion to Rs 136-138 billion while a few changes in the initial proposed terms/structure are also in the offing.

Research analyst KASB Securities, Fawad Khan said previously SPV (power holding company) was to be owned by PEPCO, but now the government might change the structure.

He said spread over KIBOR might be changed and added that previously it was proposed that the bank would charge KIBOR plus 1.5 to 2 percent.

They said government’s plan to inject liquidity in energy sector would serve as earnings accretive for oil marketing companies (OMCs) and would certainty raise on cash payout by IPPs.

Pakistan State Oil (PSO) is likely to get Rs 41 billion, Kot Addu Power (KAPCO) Rs 32 billion and Hub Power Company (HUBCO) Rs 34 billion, while NCPL, NPL and Pakgen Rs 5, Rs 3 and Rs 3 billion respectively from the injection fund.

Among big-5 banks, Allied Bank will have to make fresh participation of Rs 5.4 billion followed by Rs 3.2 billion by HBL, Rs 2.5 billion by UBL, Rs 2.2 billion by NBP and Rs 1.7 billion by MCB.

This should be earning positive for banks by improving yields and deploying surplus cash holdings, while at the same time improving their risk profile. The expected liquidity injection follows conversion of outstanding loans and TFCs of public sector power companies into T-bills and PIBs. However, Fawad noted another fund was likely in next two to three months keeping in view the slow pace of tariff hike.

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