Pakistan raises Rs109.3 billion through inaugural hybrid sukuk

Pakistan has raised Rs109.297 billion through its first hybrid sukuk issuance, with the finance ministry stating the move aims to expand investor participation and develop the Shariah-compliant debt market.

The issuance was conducted through an auction process in coordination with the State Bank of Pakistan, Pakistan Stock Exchange, Securities and Exchange Commission of Pakistan, and major commercial banks.

According to the finance ministry, the hybrid sukuk combines two structures — Ijarah Sale and Lease Back and Commodity Murabaha — with 55% of proceeds allocated to the Ijarah component and 45% to Murabaha.

The ministry said the structure represents a new approach in Pakistan’s Islamic finance market and is intended to broaden the range of available Shariah-compliant instruments.

The auction included two instruments: a one-year fixed-rate discounted sukuk and a 10-year variable rental rate sukuk.

The issue received bids exceeding the target, with total participation surpassing Rs200 billion, resulting in an oversubscription of 1.45 times. Accepted bids amounted to Rs109.297 billion in realised value.

The cut-off rental rates were set at 11.8000% for the one-year sukuk and 11.7185% for the 10-year instrument.

Officials said the issuance is expected to support the development of the domestic debt market and diversify the investor base, while contributing to efforts to reduce borrowing costs over time.