ISLAMABAD, Nov 22: The representatives of the Citibank and Hong Kong Shanghai Banking Corporation (HSBC) here on Monday met the senior government officials and completed due diligence to float roughly $500 million Islamic Bond (Sukuk) on behalf of Pakistan early next year.

Informed sources told Dawn that the representatives of both the foreign banks expressed their readiness to initially hold road shows in the Middle East for the transaction in early 2005. Citibank and HSBC were appointed the Lead Managers last month for floating the first ever Shariah compatible Islamic bond on behalf of Pakistan.

The representatives of both the banks held over five-hour-long meeting with the Economic Adviser to the ministry of finance Dr Ashfaque Hasan Khan and other officials concerned for lobbying and discussed with them holding of road shows first in the Middle East and then in Europe and other parts of Asia.

"Today's meeting was convened in connection with completing the due diligence of the transaction where we also answered various questions asked by the representatives of our lead mangers," said Dr Khan.

When contacted he said that the government officials updated the lead mangers about the current state of the economy and reforms being undertaken in various sectors of the economy.

"They wanted detailed economic update and how the social and physical sectors were doing in Pakistan," he added. Basically, he said, the lead mangers were completing the paper work to launch Islamic bond about which no date has been fixed as yet.

He said that both the Citibank and HSBC would guide the government as and when these new Islamic bond should be floated. Responding to a question, he said that the size of the Sukuk has not been determined, which could be to the tune of $300 million, $500 million or more than that.

The successful issuance of $500 million Eurobond, the economic adviser said, has encouraged the government to float Islamic bonds as time ripe for attracting investors from the Middle East.

"There is no doubt that at present we find a great appetite for Islamic bonds in Middle East," he added. Eurobond, he pointed out, had mostly attracted investors from Europe and Asia and this time the government has decided to lure Middle East-based investors many of whom were now reluctant to invest in the United States due to various reasons.

Similarly, he said that offshore US investors sitting in the Middle East could also be attracted for the new Pakistani bond venture. Responding to a question, he said that Eurobonds were being sold on premier, which showed its strength and popularity.

"This is good for the country to launch such bonds," he said adding that due to flotation of Eurobond two major international companies of the telecom sector had previously decided to substantially invest in Pakistan.