“Role of TFCs as a Financing Vehicle in Development of Capital Markets”

Abstract

Economies and businesses, all over the world, are facing new trends of globalization and the free market economy. These trends have produced a compelling and comparative environment for Pakistan’s public and private sector economies as well as for organizations. With the changing trends in the financial markets of Pakistan, investors are looking out for alternate ways for raising finance. TFCs have come out as an important source of alternate financing in the era of excessive liquidity and huge appetite for such instruments. The report primarily deals with the issues faced by the Corporate Debt Market in Pakistan and how these issues can be resolved along with the in-depth analysis of issuance of TFCs by one of the leading textile mills in the country. The report gauges the topic from both the investor and issuer’s perspective. Amid the today market conditions, a lucrative opportunity exists for the issuer’s for the issuance of TFCs as there is excessive liquidity in the market and with the issuance of first ever TFCs on Profit and Loss Sharing basis by Sitara Chemical Industries Ltd has opened up new avenues in the Islamic mode of financing. The final conclusion drawn from the report is past and the present of the TFCs have been impressive enough to make us keep our fingers crossed for the success of this instrument in Pakistan.