First government bond index launched in Pakistan

Index conforms to international European Bond Commission standards.

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By  Mark Johnson Published  February 22, 2005

Abraaj Capital held BMA Capital Management Limited has launched Pakistan’s first Government Bond Index. Called the BMA Pakistan Government Bond Index (BMA-PGBI), it tracks a basket of all outstanding government bonds with maturity of greater than one year. Farrukh Khan, CEO of BMA Capital said: “The BMA-PGBI conforms to international standards set by the European Federation of Financial Analyst’s Societies - European Bond Commission (EFFAS-EBC), which sets the blueprints for the construction of government bond indices for European countries. In addition, BMA had input from international index specialists and has incorporated local bond market conventions to these standards. “ Khan added that BMA-PGBI would provide a broad market benchmark that represents the characteristics and total return performance of bonds issued in local currency. Index constituents are priced using PKRV yields collated by Pakistan’s Financial Markets Association and reported by Reuters. Daily pricing and monthly rebalancing will be reported on Reuters page BMAI and Bloomberg page BMAM, he said. Arif Naqvi, CEO of Abraaj Capital and chairman of BMA Capital, said: “This is a landmark development in Pakistan’s capital markets and is another step in BMA Capital’s vision to become the top securities firm in the country. BMA-PGBI is part of the exciting developments taking place in Pakistan’s financial services industry. The launch of this index will go a long way in creating a benchmark to measure fixed income securities, and in particular, government bonds in the country”. Muddassar Malik, director and head of research of BMA Capital said that the last few years had seen increased awareness of the need to measure both market and investment performances in Pakistan. He said that whilst the index was formally launched earlier this month, BMA PGBI computation commenced from 1 January 2004. “BMA Capital Research is proud to launch this benchmark for institutional investors including commercial banks, asset management companies, insurance companies and pension fund managers. BMA has been working to create the Index as a means of helping the investment community to focus on measurement of performance and risk, ” Malik said. BMA index analyst, Aneel Kanwer, described the launch of BMA PGBI as the first step in offering a broader menu of performance benchmarks for institutional money managers, including a liquid government bond index based on the zero coupon yield curve. BMA Pakistan Government Bond Index weighted by market capitalisation reflects the market performance, on a total return basis of all bonds issued by government of Pakistan. The BMA PGBI is first of its kind in Pakistan. This index was made possible through a team effort at BMA and other international specialists,” he added. Market acceptability for the index was made sure through market feed back. BMA-PGBI is quoted on Reuters page BMAI, and Bloomberg page BMAM that is updated from Monday to Friday after 5:00pm, Kanwer said.

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