The Ministry of Finance is gearing up to hold a Rs. 100 billion auction for sovereign Sukuk at the Pakistan Stock Exchange (PSX) on January 23, 2023. The auction will feature 5 Sukuks with tenures of 1 year, 3 years, and 5 years, catering to both retail and institutional investors.
These Sukuks are backed by the assets of Islamabad International Airport, valued at over Rs. 203 billion, covering building, infrastructure, and land (Total Area: 26,313 Kanals and 4 Marlas).
The upcoming auction on January 23, 2024, includes offerings such as A) 1-year Ijarah Sukuk (fixed rate), B) 3-year Ijarah Sukuk (both fixed and variable rates), and C) 5-year Ijarah Sukuk (both fixed and variable rates). The 1-year Sukuk will be issued using the discount methodology, while the 3 and 5-year Sukuk will be issued at Face Value. The rental rate will be determined based on the auction results. Meezan Bank Limited, along with Dubai Islamic Bank, Bank Alfalah Islamic, and BankIslami Pakistan Limited, serves as the joint financial advisor and Shariah advisor for the issue.
The government’s previous auction in December 2023 for a 1-year sovereign Sukuk of Rs. 30 billion witnessed overwhelming response, oversubscribed by more than 12 times. With an interest in saving borrowing costs, the government decided to offer more Sukuk offerings at PSX. The Securities and Exchange Commission of Pakistan (SECP), Central Depository Company of Pakistan Limited, NCCPL, and PSX are actively collaborating with the ministry for another historic Sukuk launch.
The overall Sukuk issuance in Pakistan has surpassed Rs. 5 trillion, reflecting a significant shift towards Shariah-compliant financing and aligning with the Federal Shariat Court’s decision to move away from interest-based borrowing.
This strategic move aims to contribute to economic development, enhance financial inclusion, and promote the growth of Islamic finance in the country. The government’s commitment to Sukuk issuance is evident in its ongoing efforts to comply with Shariah principles and diversify its financing instruments.
