Five-year sukuk: 12bps higher rate of return offered

Pakistan has offered 12 basis points higher rate of return on five-year Sukuk bonds in the current fiscal year as opposed to last fiscal year to raise $1 billion from the international market. On Thursday, Pakistan issued US$ 1 billion five year Sukuk at a rate of return of 5.625 percent (as opposed to the rate of 5.5 percent for one billion dollar sukuk issued in 2016) and 1.5 billion dollar Eurobonds at 6.875 percent.
Government sources attributed the successful issuance of Sukuk and Euro bonds to the long term growth prospect of Pakistan attached with China Pakistan Economic Corridor and ongoing energy related projects. This factor, they added, has helped the country borrow at 25 basis points below the profit rate against what was projected by the lead manager.
They further stated that this is an indication that Pakistan''s long term growth prospect with low inflation is being viewed very positively in the international market. "We could have borrowed even higher amount by offering a higher rate of return," they added. Sources added that Nigeria raised $3 billion last week from the international market at 6.63 percent while Pakistan was able to get a better rate compared to Nigeria for the sukuk though not with respect to the bonds.
The process of issuance of Sukuk and Eurobond included road shows in Dubai, London, Boston and New York by a team comprising Miftah Ismail Special Assistant to the Prime Minister on Economic Affairs, Shahid Mahmood Finance Secretary and Tariq Bajwa Governor State Bank of Pakistan.
The team held meetings with over 100 potential institutional investors in these major financial centres. The Pakistani delegation consistently remained in contact with the Prime Minister who also accorded the final approval for the transactions. During the road shows, the investors expressed keen interest in Pakistan and its economy, which is evident by a total book building of over US$ 8.3 billion. The road shows ended on 28th November, 2017 and book building process closed on 29th November, 2017.