Islamic financing: First Hybrid Sukuk fetches over Rs109bn

KARACHI: The government has successfully completed the inaugural issuance of its Hybrid Sukuk, raising over Rs109 billion through an oversubscribed auction, marking a major milestone in the development of the country’s Islamic finance market.

The issuance was executed by the Debt Management Office (DMO) of the Ministry of Finance in collaboration with the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan, along with key financial institutions and capital market infrastructure entities.

The innovative Hybrid Sukuk combines two Shariah-compliant structures — an Ijarah Sale & Lease Back (SLB) component and a Commodity Murabaha arrangement — with 55 percent of proceeds allocated to Ijarah and 45 percent to Murabaha. Officials said the structure reflects increasing sophistication in Pakistan’s Islamic finance landscape and sets a new benchmark for Shariah-compliant instruments in the region.

The inaugural issuance was conducted through an auction mechanism facilitated by institutions including the Pakistan Stock Exchange, National Clearing Company of Pakistan Limited, and Central Depository Company.

Two instruments were offered: a one-year fixed-rate discounted Sukuk and a 10-year variable rental rate (VRR) Sukuk.

The auction witnessed strong investor participation, with total bids exceeding the target of Rs200 billion by 1.45 times.

The government accepted bids amounting to Rs109.297 billion in realized value.

The cut-off rental rates were set at 11.80 percent for the one-year discounted Sukuk and 11.7185 percent for the 10-year VRR instrument.

Khaliq Uz Zaman, Director Domestic Debt at the Ministry of Finance, described the issuance as a critical milestone for Pakistan’s debt market, stating that the hybrid structure would help diversify the investor base and deepen the domestic debt market.

He added that the initiative is expected to contribute to lowering borrowing costs over time, in line with the DMO’s broader objective of strengthening fiscal sustainability.

Market participants said the successful launch of the Hybrid Sukuk is likely to enhance investor confidence and attract greater participation in Shariah-compliant instruments, positioning Pakistan as a growing player in regional Islamic finance.

The management of the Pakistan Stock Exchange also congratulated stakeholders on the successful execution of the inaugural issuance.

Copyright Business Recorder, 2026