Highest ever issuance of GOP Ijarah Sukuk in a single month

Government of Pakistan (GOP) on Monday, 7th August 2023 raised a total of PKR 371 bn (over $1.29bn) through GOP Ijarah Sukuk. This was the highest issuance of Sukuk in a single auction by GOP since the start of GOP Ijarah Sukuk program in 2008.

On 3rd of August 2023, various bank participated in the auction for investment in GOP Ijarah Sukuk. 6 denominations were open for bidding in the Sukuk which included 1,3 and 5 Year Fixed Rate Sukuk and 1,3 and 5 Year Variable Rate Sukuk.

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The government intended to raise a total of PKR 240 bn from the auctions, however the Sukuk were over subscribed by over 200% with total bids received equivalent to over PKR 508 bn (approximately $1.77bn).

On the basis of the announced cutoff rates, Sukuk equivalent to PKR 371bn were issued under 5 denominations as per the following details while all bids were rejected against the 5 Year Fixed Rate denomination.

1 Year VRR: PKR 100,346 mn

   1 Year FRR:  PKR 2,161 mn

   3 Year VRR: PKR 5,000 mn

   3 Year FRR: PKR 68,385 mn

   5 Year VRR: PKR 195,250mn

   Total Accepted Amount: PKR 371,142 mn

The rental rate against the above Sukuk varied from 18.49% per annum to 23.62% per annum depending on the tenure of the Sukuk. The rental payment is to be made on half yearly basis with Sukuk redemption at maturity.

The underlying asset utilized for Sukuk issuance was Islamabad Expressway on which an Ijarah Sale and Lease Back transaction was performed. The underlying Shariah Structure of the Sukuk was approved by Shariah Advisory Committee of State Bank of Pakistan while the transaction was led by Meezan Bank Limited alongside Dubai Islamic Bank Pakistan Limited and Bank Alfalah Limited as Joint Financial Advisor to the transaction.

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