ISLAMABAD: The government successfully generated a total of Rs. 371 billion (equivalent to over $1.29 billion) through the issuance of GOP Ijarah Sukuk related to the Islamabad Expressway project.
This marks the highest value of Sukuk issued in a single auction by the government since the launch of the GOP Ijarah Sukuk program in 2008, significantly boosting the overall value of Sukuk issued to Rs. 3.5 trillion.
The recent auction saw the participation of various banks, with 6 different denominations of Sukuk available for bidding. These included 1, 3, and 5 Year Fixed Rate Sukuk, as well as 1, 3, and 5 Year Variable Rate Sukuk.
Though the government’s initial target was to raise Rs. 240 billion from the auction, the response was overwhelming, and the Sukuk received bids amounting to over Rs. 508 billion (approximately $1.77 billion), surpassing the target by more than 200%. Ultimately, Sukuk worth Rs. 371 billion were issued across 5 denominations, and bids for the 5 Year Fixed Rate denomination were rejected.
The rental rates associated with these Sukuk varied from 18.49% to 23.62% per annum, depending on the Sukuk’s duration. Rental payments will be made semi-annually, and the Sukuk will mature upon redemption.
The underlying asset for the Sukuk issuance was the Islamabad Expressway, involving an Ijarah Sale and Lease Back transaction. The Shariah-compliant structure of the Sukuk was approved by the Shariah Advisory Committee of the State Bank of Pakistan. The transaction was facilitated by Meezan Bank Limited, Dubai Islamic Bank Pakistan Limited, and Bank Alfalah Limited, acting as Joint Financial Advisors.
The increased involvement of banks in Sukuk issuance not only boosts the profitability of Islamic banks but also enables the government to raise capital for various projects or expenses at relatively lower profit rates, presenting a mutually beneficial scenario.
In the year 2023, the government has already raised a historic sum of Rs. 700 billion through various projects, setting a significant milestone in the banking sector.
Ahmed Siddiqui, Director of the Center of Islamic Finance and Economics at IBA, highlighted that the growing inclination toward Sukuk for fundraising aligns with the objective of transitioning away from interest-based economic models. Utilizing Sukuk supports the government’s efforts to align with Sharia-based principles, benefiting both the economy and Islamic capital markets.
AoA
does general public avail this opportunity to participated in GoP Sukuk through Islamic Bank long term short term medium term own their limited amount ie 0.5 million to onwards ??
thanks
for investment