The Ministry of Finance is gearing up to conduct a Rs. 100 billion auction of sovereign Sukuk at the Pakistan Stock Exchange (PSX) on January 23, 2024. The auction will feature 5 Sukuks with tenures of 1 year, 3 years, and 5 years, backed by the Islamabad International Airport’s assets valued at over Rs. 203 billion.
The offerings include 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 rental rate will be determined based on auction results. Meezan Bank Limited, Dubai Islamic Bank, Bank Alfalah Islamic, and BankIslami Pakistan Limited are joint financial and Shariah advisors for the issue.
Following the overwhelming response to the December 2023 auction, oversubscribed by more than 12 times, the government aims to save on borrowing costs with this initiative. The Security and Exchange Commission of Pakistan (SECP) and other entities are actively collaborating with the ministry for this historic Sukuk launch.
With the total Sukuk issuance in Pakistan surpassing Rs. 5 trillion, the government’s move towards Shariah-compliant financing aligns with the Federal Shariat Court’s decision to move away from interest-based borrowing. This strategy is anticipated to contribute to economic development, financial inclusion, and the growth of Islamic finance in the country.
