Karachi: With the current account deficit (CAD) having risen to $2.05b during the first month of new financial year 2017-18, the government is pondering to most probably issue an Islamic Sukuk or Eurobond worth $1b by the end of October this year.
The government has been forced to consider issuing a $1b Islamic Sukuk at an interest rate of 5.5pc in light of mounting CAD and dwindling foreign exchange reserves.
According to a senior official of the Finance Division, it hasn’t been decided whether an Islamic Sukuk or a Eurobond of $1b will be issued. Previously, the country had raised $1b through sukuk issue in October 2015 and will be the second time in two years Pakistan will be returning to the international bond market.
He added that efforts on part of leading foreign banks was underway for the issuance of Sukuk bond or Eurobond which depends on their strength in different locations. A tussle is on between international banks having more clientage base in the US and EU with those banks having client base in Middle East in convincing Pakistani authorities to launch a sukuk bond.
The official shared that the process for choosing lead managers for the issuance of sukuk bond or eurobond issuance will be started via media advertisement in coming days.
The decision of which bond to issue will be dependent on the offered size of the bond and the interest rate on offer, the official shared. Another finance division official shared that market sentiment was being gauged in respect to the bonds launch, so they were able to place a right kind of transaction for it.
