The government raised Rs2 trillion through Sukuk auctions on the Pakistan Stock Exchange (PSX) in 2024, holding a total of 15 auctions, according to data compiled by Topline Securities.
The final auction of the year, conducted on December 3, fetched Rs353 billion, with 60% of funds raised through 10-year Sukuk.
Of the total funds raised, 38% or Rs800 billion were generated from 5-year Sukuk, with 74% being variable-rate Sukuk and 26% fixed-rate. The second-largest share came from 1-year discounted Sukuk, which accounted for Rs548 billion or 28% of the total. In 10-year and 3-year Sukuk, the government raised 19% and 16% of the total funds, respectively.
The auctions received Rs6.2 trillion in participation against the government’s Rs2.1 trillion target, raising Rs2 trillion.
In the 12-month Sukuk category, yields remained on average 90 basis points lower than conventional 12-month Treasury bills.
The largest discount of 184 basis points was recorded on November 6, when the government raised Rs339 billion, including Rs116 billion from 12-month Sukuk. The yield on 1-year Sukuk fell from 19.5% to 10.99% during 2024.
For 3-year, 5-year, and 10-year Sukuk, the yields were 60, 9, and 0 basis points lower, respectively, than the corresponding secondary market yields for PIBs. The highest discount of 82 basis points was seen on May 9, 2024. Yields for these tenors dropped by 134 to 455 basis points during the year.
The caretaker federal cabinet approved amendments to the Government of Pakistan Market Treasury Bills Rules, 1998, and Ijara Sukuk Rules, 2008, in October 2023. The changes were aimed at enhancing the efficiency, flexibility, and investor participation in government securities issuance.
The government conducted the first 1-year discounted Sukuk auction through the PSX on December 8, 2023, receiving Rs396 billion in bids against a Rs30 billion target, raising Rs28.9 billion at a rental rate of 19.5%.
In January 2024, the government held its first auction for 3-year and 5-year Sukuk, targeting Rs60 billion cumulatively. The auction received Rs296 billion in bids, with Rs81 billion raised. The fixed-rate Sukuk yields for 3-year and 5-year tenors were 16.05% and 15.49%, respectively, slightly below the corresponding secondary market rates.
Since the first auction in December 2023, all subsequent auctions for 1-year Sukuk have been conducted through the PSX system. Floater spreads over the reference rate also declined, with the spread dropping to -89 basis points in the last auction of 2024.
