Ijarah Sukuk issuance for GoP: Meezan Bank acts as joint financial advisor

KARACHI: Meezan Bank, a pioneer in Islamic banking, acted as lead Joint Financial Advisor in the groundbreaking listed Ijarah Sukuk Issuance for the Government of Pakistan (GoP).

This is the first listed GoP Ijarah Sukuk issued through Pakistan Stock Exchange (PSX), allowing retail investors access to Shariah-compliant government securities in denomination of Rs 5000. Other joint financial advisors included Dubai Islamic Bank (Pakistan) Limited, Bank Alfalah Limited and Bank Islami Pakistan Limited.

This maiden auction, held on December 8, 2023, with settlement on December 11, 2023 at the PSX, aimed at raising Rs 30 billion, surpassed all expectations, and was oversubscribed by more than 13 times of the participated realized value. The cut off yield was set at 19.5 percent. The tenor of the Sukuk is 364 days, providing investors with a short-term Shariah-compliant investment opportunity.

This was the first issuance in the series of three auctions announced by the Ministry of Finance. The next two auctions are scheduled to be held in Jan and Feb 2024.

This milestone issuance not only signifies the robust demand for Shariah-compliant investment but gives access to retail investors to invest in ethical financial instruments. The overwhelming success of the auction underscores the confidence of investors in Pakistan’s economic stability.

It is worthwhile to mention that through this auction the Government of Pakistan was able to raise funds at almost 2.5 percent lower financing rate compared to the prevalent policy rate which translates into savings of Rs 750 million in a single issuance.

The inauguration ceremony at the Pakistan Stock Exchange, attended by the caretaker Prime Minister Anwar-ul-Haq Kakar and Finance Minister Dr Shamshad Akhtar, highlighted the government’s commitment at promoting Islamic finance and inclusivity in the financial markets. This signifies commitment of GoP towards the implementation of the Federal Shariat Court’s decision to transition to a Riba-free economy. Meezan Bank remains at the forefront of Islamic finance, championing financial inclusivity and pioneering innovative solutions.

Copyright Business Recorder, 2023