Govt raises 353 billion against targeted 500 billion in Ijarah Sukuk auction

No reduction in cutoff rental rates of FRR bonds

In the latest auction of Ijarah Sukuk bonds, held by the State Bank of Pakistan on December 3rd, the government has raised Rs 353 billion against a target of Rs 500 billion.

A subdued participation was observed, especially in the fixed rental rate (FRR) category, where the three year rental cut-off was put at the 11.5% mark, same as last auction. Similarly, the 5-year and ten year FRR Sukuk’s rental yield was cut-off at 12.1% and 11.7% respectively.

The largest participation was seen in the long term variable rental rate (VRR) Sukuk, the GIS 10-year Sukuk, where the government was able to raise Rs 212 billion, against the targeted Rs 50 billion. The VRR Sukuk is linked to the 6-month weighted average of the Pakistan Market Treasury Bills (MTBs) rate, adjusted by a fixed spread determined during the auction.

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