Government sounds US dollar five-year sukuk at 6 percent, 10-year bond at low 7 percent

The Islamic Republic of Pakistan is marketing US dollar-denominated five-year sukuk and conventional 10-year bonds at initial price thoughts of 6% and low 7% respectively. The federal cabinet has approved borrowing of up to $3 billion via a Eurobond and sukuk, but the government would "most likely" raise only $1.5 billion, a senior Pakistani government official told Reuters on Tuesday.
The country is likely to split the fundraising equally between the Eurobond and sukuk depending on the rates, the official added. The 144A/Reg S notes have initial ratings of B3/B (Moody''s/S&P), on par with the sovereign. Pakistan is rated B by Fitch. Citigroup, Deutsche Bank, Dubai Islamic Bank, ICBC, Noor Bank and Standard Chartered Bank are joint bookrunners.