SBP raises Rs47bn from Sukuk auction

KARACHI: The State Bank of Pakistan (SBP) has reported that the government raised Rs47.24 billion through the auction of the five-year Government of Pakistan Ijarah Sukuk on Thursday.

The auction target for the Islamic bond had earlier been set at Rs75 billion. The offered amount was Rs115.29 billion.

Of the total accepted bids, the amount of accepted competitive bids stood at Rs46.44 billion, while non-competitive bids’ amount was recorded at Rs 797 million.

The cut-off margin was set at 10 basis points under the benchmark, applicable on all accepted bids.

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Previously on April 23, the government raised Rs76.38 billion through an auction of the Islamic bond. In that case, the auction target had been set at Rs75 billion, while the offered amount was Rs190 billion. 

Then on May 21, the government raised Rs74.61 billion through another auction. In that case, the auction target had also been set at Rs75 billion, while the offered amount was Rs114.49 billion.

The next auction is to be held on July 23, also for Rs75 billion. 

The SBP will be issuing the government of Pakistan sovereign Sukuk based on ‘Ijarah’, a technical Islamic term that means ‘to give something on rent’, against the Jinnah International Airport Terminal for five years.

In doing so, the central bank has previously said it wanted to achieve the twin objectives of stimulating trading in Shariah-compliant debt securities, and help plug the budget gap amid the spread of COVID-19 in Pakistan.

Earlier in April, the federal cabinet approved issuing the Sukuk bond to generate close to Rs700 billion for budget deficit financing, particularly to combat Covid-19.

The issuance also helps with general SBP efforts to regulate and improve investment options for the growing Islamic banking industry. The Sukuk was first issued in Pakistan in 2008, as a liquidity management avenue for the domestic Islamic industry.

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Meiryum Ali
The author is a member of the staff and can be reached at [email protected]
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