Pakistan raises Rs109.3bn via inaugural issuance of hybrid sukuks

Pakistan government completed the inaugural issuance of hybrid sukuks, mobilising Rs109.297 billion at the Pakistan Stock Exchange (PSX), according to a bourse press statement on Thursday.

The instruments offered for the inaugural issuance were 1 Year Fixed Rate Discounted Government of Pakistan Hybrid Sukuk and 10 Year Variable Rental Rate (VRR) Government of Pakistan Hybrid Sukuk.

“The overall issues were oversubscribed by 1.45 times, surpassing the total target amount of PKR 200 billion…The cut-off rental rates were set at 11.8000% for 1 Year Discounted and 11.7185% for 10 Year VRR,” the statement read.

• The Hybrid Sukuk structure comprises of an Ijarah Sale & Lease Back (Ijarah SLB) transaction and a Commodity Murabaha transaction, with 55% of proceeds allocated to Ijarah SLB and to 45% to Commodity Murabaha.

The innovative structure reflects Pakistan’s advancing sophistication in Islamic finance and sets a new benchmark for Shariah‑compliant instruments in the region. The issuance paves the way for greater investor participation and enhanced regional leadership in Islamic financial innovation, it added.

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The issuance was done through an auction process by the Capital Market Infrastructure Institutions (CMIIs) following the existing auction mechanism.

Khaliq Uz Zaman, Director Domestic Debt, stated in the statement that the introduction of the hybrid structure was a critical milestone and a significant step towards the growth of Shariah-compliant debt markets in Pakistan. “It will diversify the investor base and deepen the domestic debt market, which will eventually reduce borrowing costs, which was a key objective of the Debt Management Office (DMO).”

The DMO of the Ministry of Finance completed the inaugural issuance in collaboration with the State Bank of Pakistan (SBP), the Securities and Exchange Commission of Pakistan (SECP), Joint Financial Advisors (JFAs) – Meezan Bank Limited (MEBL), Bank Alfalah Limited (BAFL), Dubai Islamic Bank (DIB), and BankIslami Pakistan Limited (BIPL) – together with the Capital Market Infrastructure Institutions (CMIIs) – Pakistan Stock Exchange Limited (PSX), National Clearing Company of Pakistan Limited (NCCPL), Central Depository Company of Pakistan Limited (CDCPL) and SCB Sadiq.