DEWAN SALMAN FIBRE LIMITED (DSFL)

Abstract

Dewan Salman Fibre Limited (DSFL) issued Pakistan's first Euro-convertible bond in May 1994. The bond issue was of US $45 million and it was offered globally to finance their project expansion. It was anticipated that the new offer would not only pave the way for attracting foreign investment in Pakistan through debt instruments, but would also offer the investors an opportunity to hold the stock of the company. However, the stock price plunged immediately after the issue, and the benchmark United States Federal Reserve interest rate rose to over 7% per annum. This significantly affected the performance of the international capital markets. Consequently, the DSFL issue suffered withdrawals, which made an expected over-subscribed transaction into a heavily discounted one.