List of Companies listed at Karachi Stock Exchange

(KSE):
Total listed companies = 548
Total sectors in which listed = 35

 Atlas Honda Limited

 HinoPak Motors Limited
 Honda Atlas Cars
 Engro Polymer and Chemicals Limited
 Ghani Global Holdings Limited
 I.C.I. Pakistan Limited
 Ittehad Chemical Limited
 Fateh Textile Mills Limited
 Feroze 1888 Mills Limited
 Ghazi Fabrics International Limited
 Gul Ahmed Textile Mills Limited

http://www.ksestocks.com/ListedCompanies/SortByName

What is a Sukuk?
A sukuk is an Islamic financial certificate, that complies with Islamic religious law commonly known as
Sharia.

the issuer of a sukuk sells an investor group a certificate, and then uses the proceeds to purchase an
asset, of which the investor group has partial ownership.

The issuer must also make a contractual promise to buy back the bond at a future date at par value.

Sukuk were created in order to link the returns and cash flows of debt financing to a specific asset being
purchased, effectively distributing the benefits of that asset.

GOVERNMENT OF PAKISTAN DEBT SECURITIES:

Product Offering
Pakistan Investment Bonds (PIBs)

 Long-term, coupon bearing instruments with semi-annual (six monthly) coupon payments.

 Available maturities upto 10 Years.

 Auction schedule and targets for fresh PIBs issuance announced by SBP on a quarterly basis.

Treasury Bills

 Short-term, highly liquid zero-coupon Government Debt Instruments.

  Sold at discount to face value.

 Tenors upto 1 Year.

 Auction conducted by SBP on a fortnightly basis.

Ijarah Sukuks

Ijarah Sukuks, are medium term investment instruments with floating coupon payments guaranteed by
the Government of Pakistan.

 Shariah compliant

 Low risk

 Semi-annual profit payments

 Issued by Government of Pakistan

https://www.sc.com/pk/invest/gop-debt-securities.html

TFC

A Term Finance Certificate (TFC) is a corporate debt instrument issued by companies in Pakistan to
generate short and medium-term funds. The maturity of the certificate depends on the issue of the bond.
PIBs typically provide higher yield compared to Government Bonds and Bank Deposit due to higher risk.

Types of TFCs

 The TFCs issued to date include both fixed and floating rate instruments, although issuers have
lately tended to favor the floating rate variant.
 The coupon rate on floating rate TFCs is set at a risk-free benchmark rate plus a risk spread to
reflect the relative risk of the instrument. The risk-free benchmark is typically the SBP’s discount
rate, or the auction yield on the Pakistan Investment Bond (PIB) of equivalent maturity.
 Floating rate TFCs may impose caps and floors on the coupon payments.
 Some TFCs may have embedded call and put options.

Like bonds, TFCs are structured to provide regular income in the form of coupons, which are typically paid
semi-annually. However, unlike a generic bond, where the principal is repaid in lump sum at maturity, a
TFC’s principal is gradually redeemed over the tenor of the instrument.

2. Bonds/ TFCs (Term Finance Certificates)

A bond is like an IOU issued by a government or a company. You give them money for a certain period and
they promise to pay a certain interest rate and re-pay the principal on maturity. A bond is simply a
loan/debt instrument in the form of a security with different terminology. The authorized issuer owes the
 holders a debt and is obliged to repay the principal and interest (the coupon) at a later date, termed
maturity.Bonds are issued by Public Authorities (like T-bills, Govt. bonds), credit institution and companies
(in the form of TFCs).

Pros Cons

i. Fixed Return i. Maturity Risk

ii. Capital Security ii. Inflation Risk
iii. Secured Return
iv. Tradable in Secondary Market

Bonds enable the issuer to finance long-term investments with external funds. Note that certificates of
deposit (CDs) or commercial paper are considered to be money market instruments and not bonds.

Bonds and stocks are both securities, but the major difference between the two is that stock-holders are the
owners of the company (i.e., they have an equity stake), whereas bond-holders are lenders to the issuing
company. Another difference is that bonds usually have a defined term, or maturity, after which the bond is
redeemed, whereas stocks may be outstanding indefinitely.

The most important features of a bond are:

 Nominal, principal or face amount-the amount on which the issuer pays interest, and which has to be repaid
at the end
 Issue price-the price at which investors buy the bonds when they are first issued.(Face value of bond plus
bond issuance fees)
 Maturity date-the date on which the issuer has to repay the nominal amount
 Coupon-the interest rate that the issuer pays to the bond holders. Usually this rate is fixed throughout the
life of the bond. Coupon rate is the interest rate which you are earning on your fixed income across the
period
 Coupon dates-the dates on which the issuer pays the coupon to the bond holders. This can be six monthly,
annually or payment at the time of maturity.

Issuance of tfc:

Securities and Exchange Commission of Pakistan (SECP), which regulates Pakistan’s securities, is also
responsible for regulating the TFC market. Without SECP’s consent no company can issue TFC for public
subscription in Pakistan.

Key challenges confronted by the TFC market

 Secondary market has been inactive due to the fact that the institutional investors tend to buy
the TFCs and hold them until maturity. Individual buyers form a small minority in the TFC
market in Pakistan. These characteristics of the market together result in a general lack of
liquidity;
 Market infrastructure is weak and needs to be upgraded through the use of on line automated
buying, selling and settlement.
 There is a general confusion in the market as to whether this instrument is Islamic or
otherwise. It looks as if there is only a change of name and TFC is a debt instrument like the
ones traded in the markets around the around;
  Expectations of inflation and frequent devaluation of PKR (Pakistani Rupee) has hindered the
foreign investors to buy TFCs
 Most domestic business concerns in our country are owned by families, who are reluctant to
disclose financial and other the information to the public and prefer either bank lending or
private placement rather than public offering;
 There is a need for greater accounting and related disclosures by businesses to mitigate moral
hazard arising out of asymmetry of information between the corporations and individual
investors. This problem can be solved through independent private credit rating agencies in the
country;
 There is a need for capacity building of the State Bank of Pakistan (SBP) and Securities and
Exchange Commission of Pakistan (SECP) so that these agencies can proactively deal with the
problems of the TFC market in Pakistan;
 The infrastructure and legal framework for facilitation of the corporate debt market is not
sufficient at present. It needs to be improved and augmented by strong and transparent courts
where justice should be seen to have been dispensed;
 Pakistan has seen policy shifts strongly correlated with the political instability in the country.
There is a need to have long term policies relating to taxation including income tax and stamp
duties in respect of the TFC transactions;
 High returns on NSS Schemes had been a major hurdle in the way for development of the TFC
market in Pakistan
 Excessive borrowing by the public sector for financing the budget deficit led to the increase in
the interest rates and crowded out the private investment.
 TFCs are relatively new instruments in the Capital Market of Pakistan. They are not well
understood by an average investor
 Last decade has witnessed economic volatility in Pakistan reflected in the form inflation and
interest rate instability. This has constrained the individuals and institutions to invest in the
short term projects only. They are inclined to find alternative investment avenues rather than
investing in the long term debt market;

How are listed TFCs traded in the secondary market?

To trade listed TFCs you would need to approach a broker licensed to deal on the exchange on which the
TFC is listed. The basic features of secondary trading are as follows:

Trading: Bid (buying) and offer (selling) prices for TFCs listed on the KSE may be found on the Bond
Automated Trading System (BATS). Quotes for TFCs listed on the Lahore Stock Exchange (LSE) may be
found on the trading system of the LSE.

Trading lot: The trading lot for a TFC is one unit and multiples thereof. Typically, one unit has a face
value of Rs,5000.
Delivery: TFCs may be traded in both physical (paper) and electronic form. Like shares, physical TFCs are
delivered with attached transfer deeds, properly signed and verified. Alternatively, TFCs may also be
delivered in electronic form through the Central Depositary System (CDS). The CDS is an electronic
share/certificate register operated by the Central Depositary Company (CDC).

How can I buy/sell TFCs through Taurus Securities?

Taurus Securities is a leading corporate member of the Karachi Stock Exchange (KSE). Through us, you
can buy and sell TFCs listed and traded on the KSE. In addition, through our affiliates in Lahore, we can
provide you with access to TFCs listed and traded on the Lahore Stock Exchange.

You can buy/sell TFCs through Taurus Securities via the following simple process.

You contact our TFC dealing desk, specify your requirements (buy or sell), and ask for current market
quotes.