Financial

Management:

Submitted By:
 Abdul Rauf (UW-17-MGT-BBA-028)
 M. Jabbar Khan (UW-17-MGT-BBA-043)
 Hamza Sunny (UW-17-MGT-BBA-016)
 Uzair Ali Khan (UW-17-MGT-BBA-030)
 Nasrullah Khan (UW-17-MGT-BBA-010)

Submitted To:
Sir Aqil Waqar

Date:
7th April, 2020.

Contribution of Abdul Rauf:

Debt Securities offered and approved in
Pakistan.

Debt Securities:

Debt security refers to a debt instrument, such as a government bond, corporate bond,
certificate of deposit (CD), municipal bond, or preferred stock, that can be bought or sold
between two parties and has basic terms defined, such as notional amount (amount borrowed),
interest rate, and maturity and renewal date.

Fixed income securities include Corporate Debt securities/ bonds and Government Debt
securities/ bonds. These bonds are investment products that provide a return in the form of
fixed periodic payments as mark-up and the eventual return of principal. Any investor can
purchase these securities listed at the Stock Exchange through authorized participants

Corporate Bonds:

A corporate bond is a bond issued by a corporation in order to raise financing for a variety of

reasons such as to ongoing operations, M&A, or to expand business. The term is usually applied
to longer-term debt instruments, with maturity of at least one year.

There are various types

• Coupon Bonds
• Zero Coupon Bonds
• Wapda Bonds
• PIA Bonds
Coupon Bonds:

The coupon (i.e. interest payment) is usually taxable for the investor. It is tax deductible for the

corporation paying it. For US Dollar corporates, the coupon is almost always semiannual, while
Euro denominated corporates pay coupon quarterly.

Zero Coupon Bonds:

The coupon can be zero. In this case the bond, a zero-coupon bond, is sold at a discount.

Wapda Bonds:

• Published in 1987-88

• Publish six different bonds

• Maturity is 2-3 years.

• Interest rate is 5-10%

• Government Guaranteed

PIA Bonds:

• Issued in 2000-2003

• First time get amount of 2.5 millions

• Interest rate is 14-16%

• Maturity is 5 years
Contribution of Jabbar Khan:

Government Bonds:

Government bond is a debt security loaned by a government to assist government spending,

most often issued in the country’s local interest.

The various types of Government bonds issued by the Govt. of Pakistan are as follows:

• Pakistan Investment Bonds

• Sukuk
• Treasury Bills

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.
• Tenor’s 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.

Contribution of Uzair Ali Khan:

Investment Avenues

Securities can be bought through the following investment avenues.

Secondary Market Purchase / Sale

 Possibility to buy and Sell securities on market based yields.

 Instruments sourced from Secondary Market.
 Wide variety of tenors available.
 Ease of entry and exit – highly liquid market.

Non Competitive Bids (NCB)

 Avenue to participate in the Primary auction for individual and small institutional
investors.
 NCB will be accepted at weighted average yield as per the current auction by
SBP.
 Bids to be submitted to SCBPL two days prior to the auction date.
 Maximum size of non-competitive bids for an investor will be 0.25% of the pre-
announced auction target or PKR 25.0M, whichever is higher (subject to availability of
funds with SCBPL).
 Submission of multiple bids in an auction in a single tenor would be treated as
void.
Competitive Bidding

 Investors can participate in the Auction through Competitive Bids.

 Investors have the flexibility to decide the yield, where they would like to bid for
the security.
 No limit on participation amount (subject to availability of funds with SCBPL).
 SBP can reject bids at their discretion and as a result customers bid may not be
accepted.

Contribution of Hamza Sunny:

Transaction Process:

Existing SCB Customer:

Customer interested in GOP Debt Securities will contact their respective Relationship or Branch
Manager.

Customer Suitability Assessment:

A suitability assessment will be conducted by your branch RM to ensure the desired investment
is suitable, and in line with your investment goals.

IPS Account Opening Act:

Customer will be provided with IPS account opening documents that will need to be filled,
signed, and returned to the bank for IPS account opening.

Indicative Pricing / Quotation:

Indicative rates to be provided to the customer according to tenure and amount invested.

Agreement to Indicative Pricing:

Once agreed, customer will need to provide their acceptance to the Bank in a signed Deal
Confirmation letter.

Fund Arrangement:

Customer will ensure relevant funds are present in their SCB account.

Purchase of Instrument:

The investment amount will be debited from the customer account, and the instrument will be
reflected in the customer's IPS account.

Contribution of Nasrullah Khan:

Municipal Bonds:

Municipal bonds are debt securities issued by these organizations to bondholders. ... The face
value, or par value, of the bond is the amount of the bond when it is issued. To entice investors
to buy a bond, and thus lend money to these institutions, issuers pay interest on the bond.

Commercial Papers:

Commercial paper is a commonly used type of unsecured, short-term debt instrument issued
by corporations, typically used for the financing of payroll, accounts payable and inventories,
and meeting other short-term liabilities. Maturities on commercial paper typically last several
days, and rarely range longer than 270 days. Commercial paper is usually issued at a
discount from face value and reflects prevailing market interest rates.