Karachi: The Government of Pakistan successfully raised Rs114.347 billion through its third Hybrid Sukuk auction, attracting substantial investor interest in Shariah-compliant financial instruments. This marks the second issuance of such Sukuk in the current month, reflecting a robust demand for these Islamic investment avenues.
According to Meezan Bank Limited, which served as the Lead Joint Financial Advisor for the transaction, the auction was conducted via the Pakistan Stock Exchange on behalf of the Ministry of Finance. The auction received total bids amounting to Rs354.395 billion in face value, resulting in a realized value of Rs344.716 billion.
The auction results indicated a cut-off yield of 12.00 percent for the one-year fixed-rate (discounted) Sukuk, an increase of 20 basis points from previous levels. The 10-year Variable Rental Rate Sukuk was priced at 11.7568 percent, providing a spread of 38.83 basis points over the reference rate of 11.3685 percent.
Market observers pointed to improved liquidity conditions and a sustained appetite among institutional investors for Islamic investment products, especially sovereign Sukuk with diverse return structures, as reasons for the strong response. The Hybrid Sukuk's combination of fixed and floating rate features aims to expand the government's Shariah-compliant borrowing base while offering flexibility to investors with different risk-return profiles.
The successful issuance aligns with the government's ongoing efforts to enhance the domestic Sukuk market and secure funding through innovative Islamic financial instruments.
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