01-15-2010, 10:17 AM
KARACHI: The sale of National Savings Bonds (NSBs) kicked off on Tuesday, with the people involved in the process claiming an ‘overwhelming’ public response. Being the first of the 15 days open for public subscription, officials were unable to provide accurate figures of day’s deals in the evening.
The bonds were launched on Monday by Finance Minister Shaukat Tarin with Zafar Sheikh, director general of National Savings, by his side. A senior official of the bond management unit said in response to queries on Tuesday that information reaching him from the 32 NSS centres in Karachi, Lahore and Islamabad indicated that all categories of subscribers had come forward including individuals, mutual funds, provident, pension and gratuity funds. Body corporates and banks were ineligible to apply.
The official who asked not to be named because he did not have the authority to speak on behalf of the NSS said that he would not be surprised if the new bonds were able to raise ‘billions of rupees’ because of their favourable features.
The bonds being open-ended, there was no issue size. Minimum subscription to the offer was notified to be Rs20,000 with no upper cap. The variants of the bonds were: For three years, offering yield of 12.5 per cent per annum; five years at 12.55 per cent and ten-year bonds to provide return of 12.60 per cent. The profit payable biannually is exempt from zakat.
A significant feature of the bonds is that these would be listed and tradable at the three stock exchanges from Feb 25. All subscribers are required to maintain an Investor account/sub-account (IAS) with the Central Depository Company (CDC) - the custodian of stock exchange securities.
The CEO at CDC, Mr Hanif Jakhura, observed that currently there were 55,000 investor accounts and 250,000 sub-accounts. He agreed that the number of accounts could rise with the new subscribers of NSBs entering the market.
“In many ways, for the stock market it is a great step forward,” said Mr Jakhura. The market capitalisation would shoot giving it the much needed depth, he said, adding that the bonds would also provide a secondary market to trade in an alternative debt instrument apart from the currently available Term Finance Certificates (TFCs).
But several analysts thought that for all the enthusiasm of the NSBs monitors, it had to be seen if too many investors in mutual funds and the like would shift cash to bonds. And an economist who seemed to have no love for the bonds remarked that after having exhausted the banking channel, all that the government was doing was to attempt to borrow from the stock exchanges.
The executive at the NSS Bond Management stressed that eligible investors would prefer to park cash in NSBs, for the reason that the bonds were backed by sovereign guarantee of the government.
“The bonds also promise the highest rate of return on any savings scheme, with the added advantage of trading at the bourses,” he said, adding that the closest competitor, special savings accounts, currently provided the peak rates at 11.6 per cent
http://www.dawn.com/wps/wcm/connect/dawn...onse-za-05
The bonds were launched on Monday by Finance Minister Shaukat Tarin with Zafar Sheikh, director general of National Savings, by his side. A senior official of the bond management unit said in response to queries on Tuesday that information reaching him from the 32 NSS centres in Karachi, Lahore and Islamabad indicated that all categories of subscribers had come forward including individuals, mutual funds, provident, pension and gratuity funds. Body corporates and banks were ineligible to apply.
The official who asked not to be named because he did not have the authority to speak on behalf of the NSS said that he would not be surprised if the new bonds were able to raise ‘billions of rupees’ because of their favourable features.
The bonds being open-ended, there was no issue size. Minimum subscription to the offer was notified to be Rs20,000 with no upper cap. The variants of the bonds were: For three years, offering yield of 12.5 per cent per annum; five years at 12.55 per cent and ten-year bonds to provide return of 12.60 per cent. The profit payable biannually is exempt from zakat.
A significant feature of the bonds is that these would be listed and tradable at the three stock exchanges from Feb 25. All subscribers are required to maintain an Investor account/sub-account (IAS) with the Central Depository Company (CDC) - the custodian of stock exchange securities.
The CEO at CDC, Mr Hanif Jakhura, observed that currently there were 55,000 investor accounts and 250,000 sub-accounts. He agreed that the number of accounts could rise with the new subscribers of NSBs entering the market.
“In many ways, for the stock market it is a great step forward,” said Mr Jakhura. The market capitalisation would shoot giving it the much needed depth, he said, adding that the bonds would also provide a secondary market to trade in an alternative debt instrument apart from the currently available Term Finance Certificates (TFCs).
But several analysts thought that for all the enthusiasm of the NSBs monitors, it had to be seen if too many investors in mutual funds and the like would shift cash to bonds. And an economist who seemed to have no love for the bonds remarked that after having exhausted the banking channel, all that the government was doing was to attempt to borrow from the stock exchanges.
The executive at the NSS Bond Management stressed that eligible investors would prefer to park cash in NSBs, for the reason that the bonds were backed by sovereign guarantee of the government.
“The bonds also promise the highest rate of return on any savings scheme, with the added advantage of trading at the bourses,” he said, adding that the closest competitor, special savings accounts, currently provided the peak rates at 11.6 per cent
http://www.dawn.com/wps/wcm/connect/dawn...onse-za-05