Government raises Rs239.3 billion through hybrid Sukuk auction via PSX

The government raised Rs239.33 billion through an auction of fixed-rate discounted and variable rental rate hybrid Sukuk, accepting nearly twice the combined pre-auction target of Rs125 billion.

The Pakistan Stock Exchange conducted the primary-market auction on July 22 for fresh three-month, six-month, one-year and 10-year Government of Pakistan Hybrid Sukuk.  Investors submitted bids with a total face value of Rs770.23 billion and a realised value of Rs741.29 billion, equivalent to about 5.9 times the government’s target.

The government accepted Sukuk with a combined face value of Rs250.40 billion. Because the short-term securities were issued at a discount, their realised proceeds were lower than their face value, bringing the total cash raised to Rs239.33 billion.

The auction was divided into a Rs75 billion target for three-month, six-month and one-year fixed-rate discounted Sukuk and a Rs50 billion target for the 10-year variable rental rate issue.

For the three short-term tenors, the government accepted a total face value of Rs173.12 billion, generating realised proceeds of Rs162.80 billion.

The three-month Sukuk attracted bids with a face value of Rs157.53 billion and realised value of Rs153.46 billion. The government accepted Rs82.51 billion in face value, raising Rs80.40 billion in realised proceeds.

The three-month security, maturing on October 15, 2026, carried a competitive cut-off price of Rs97.4218 and a cut-off yield of 11.4994%. Non-competitive bids were allotted at a weighted average yield of 11.4413%.

For the six-month Sukuk, investors submitted bids with a face value of Rs41.05 billion and realised value of Rs38.79 billion.

The government accepted a face value of Rs25.86 billion, with realised proceeds of Rs24.45 billion. The security will mature on January 21, 2027.

The competitive cut-off price for the six-month issue was fixed at Rs94.4920, translating into a yield of 11.6902%. The weighted average yield on non-competitive bids stood at 11.5685%.

The one-year discounted Sukuk received bids with a face value of Rs138.40 billion and realised value of Rs123.67 billion.

The accepted face value was Rs64.75 billion, while realised proceeds amounted to Rs57.96 billion. The security will mature on July 22, 2027.

Its competitive cut-off price was set at Rs89.4394, with the highest cut-off yield among the four tenors at 11.8400%. The non-competitive portion was accepted at a weighted average yield of 11.7526%.

Demand was strongest for the 10-year variable rental rate Sukuk, which attracted bids with a face value of Rs433.25 billion and realised value of Rs425.37 billion against a pre-auction target of Rs50 billion.

The government accepted a face value of Rs77.29 billion from the 10-year bids, raising Rs76.53 billion in realised proceeds.

The issue, which matures on July 23, 2036, had a reference rental rate of 11.3904% for the first period, based on the latest six-month weighted average yield for Market Treasury Bills.

Competitive bids worth Rs77.15 billion in face value were accepted at a cut-off price of Rs98.8919 and a cut-off yield of 11.5803%.

A further Rs135 million in non-competitive bids was accepted at a weighted average price of Rs99.0213 and a yield of 11.5580%.

Overall, the government accepted about 32% of the realised bids submitted across the four tenors. The proceeds from the three discounted instruments accounted for around Rs162.80 billion, while the 10-year Sukuk contributed another Rs76.53 billion.