‘Gender Bond to start funding women-led businesses by end of July’

A symbolic image of a rupee currency dealer collecting local currency.  - AFP/File
A symbolic image of a rupee currency dealer collecting local currency. – AFP/File

KARACHI: With a focus on financing women-led micro-businesses, the Gender Bond will be fully available by the end of July or mid-August – a first for South Asia”, Chief Executive Officer (CEO) of Infrazamin Pakistan Mahin Rehman said.

The bond, with a maturity of three years, aims to raise PKR 2.5 billion through an initial private placement and subsequent over-the-counter listing, making it accessible to a wider range of capital market participants. The bond benefits from Infrazamin’s credit guarantee, which covers 100% of the principal amount of the bond, as well as a partial guarantee for interest payments.

Speaking exclusively to Geo.TV, the CEO said that they need some clearance from the Securities and Exchange Commission of Pakistan (SECP).

However, the bond has already been launched and is in the marketing stage and the subscription is expected to be completed by July, subject to all requisite approvals from SECP, he said.

He highlighted, “This is the first gender binding in South Asia and probably in the Middle-East as well.” Never before has such a step been taken for the women of this region.

Initially the BOD aims to raise Rs 2.5 billion to provide small loans on a business basis to the women of Pakistan, especially women in rural areas.

He said, it is commercial based activity so that all the stakeholders are benefited and it does not look like soliciting donations, capital market investors will invest as normal investment and get profit in return.

Credit guarantee provider Infrazamin has entered into an agreement with Kashf Foundation, a Section 42 company and a licensed microfinance institution. The collaboration aims to introduce Pakistan’s inaugural “Gender Bond” to institutional investors in the capital market.

A “Gender Bond” is a privately placed term finance certificate that will be listed later. Proceeds from this bond will be directed towards empowering women through Kashf Foundation’s lending initiatives, with a special focus on micro-infrastructure development.

These infrastructure projects include building schools in rural areas, rehabilitating flood-damaged homes, and expanding micro-businesses led by women.

It enjoys a long-term credit rating of ‘AAA’ and ‘A1+’ from PACRA, and is attractively priced at 3-month KIBOR (Karachi Interbank Offered Rate) and a spread of 1.50%.

This pioneer bond will exclusively allocate all of its proceeds to the Kashaf Foundation’s microfinance loan portfolio, which will support approximately 30,000 women from low-income households in micro-infrastructure development.

The bond proceeds are expected to strengthen the financial position of Kashf Foundation and provide critical commercial capital to underprivileged women, enabling them to pursue their entrepreneurial aspirations, rehabilitate homes, and expand schools and small businesses Will be able These lending activities will contribute to the financial independence, capacity building and overall economic growth and productivity of women in Pakistan.

Recent amendments by SECP have facilitated risk mitigation by giving 85% discount to NBFCs (Non-Banking Financial Companies) for exposures related to guarantees of Infrazmin, similar to the exposure discount provided to commercial banks by State Bank of Pakistan . These amendments also include different types of support for mutual funds.

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