The government raised Rs479 billion through the sale of one-year Ijarah Sukuk at the Pakistan Stock Exchange (PSX), attracting 16 times more than the target amount of Rs30 billion.
The event was attended by caretaker Prime Minister Anwaarul Haq Kakar, caretaker Finance Minister Dr Shamshad Akhtar, and PSX MD and CEO Farrukh H Khan, among others.
The PM said the auction was a remarkable achievement for the entire market ecosystem and reflected the confidence of investors in the economy. He said the government had addressed the structural and macroeconomic issues and improved the fiscal and external accounts.
The auction marked the first time that the Ministry of Finance conducted a primary market auction of government debt securities at the PSX, in addition to the State Bank of Pakistan (SBP).
The cut-off yield for the Sukuk was below 20%, which was significantly lower than the average 22% return on one-year T-bills. The auction was aimed at simplifying the participation in government securities, diversifying the investor base, and enhancing transparency.
The finance minister said the auction was a momentous occasion for the financial markets and the economy of Pakistan. She said the amendment to existing rules had enabled the raising of government debt in capital markets.
The PSX chief said the auction would augment efficiency, flexibility, registration, trading and transfer of the government debt securities.
Earlier on Tuesday, the PSX announced it would hold the first-ever auction of listed government Ijara Sukuk bonds in a bid to raise Rs90 billion from the sale of one-year Islamic bonds between December 2023 and February 2024. The bonds are based on the Shariah-compliant principle of Ijarah, which involves the leasing of assets.
The auction was said to be held through the Capital Market Infrastructure Institutions (CMIIs), which include the PSX, the National Clearing and Settlement Company of Pakistan (NCCPL), and the Central Depository Company of Pakistan (CDC).
The Ministry of Finance had recently approved some amendments to the rules governing the issuance, registration, trading, and transfer of government debt securities through the CMIIs, allowing the PSX to conduct the primary market issuance.
Now, the second auction will be held on January 23, with the same target of Rs30 billion, and settlement on January 24, 2023. The third and final auction will be held in February 2024, with a target of Rs30 billion and settlement on the same day as the auction date.