Sukuk may be auctioned as reopening of previously issued GIS: SBP

KARACHI: The government has decided that GoP Ijarah Sukuk (GIS) may also be auctioned as reopening of previously issued GIS. According to State Bank of Pakistan, as per the auction mechanism re-opening auctions may be conducted for both Fixed and Variable Rental Rate GIS.

Primary Dealers (PDs) of GIS will submit bids in terms of price, per Rs100 of face value, up to four decimal points as per sample tender. The bid price must not include 'price premium due to higher first rental'.

The settlement amount of re-opening auction to be paid by successful bidders will be equal to the amount calculated as per accepted (cut off) bid price plus price premium due to higher first rental. The Price premium due to higher first rental will be calculated for the number of days lapsed from start of the rental period of original issue based on applicable rental amount to the settlement date (the day count convention will be Actual/ 365).

Re-opening auctions of GIS will be conducted through uniform price competitive bidding auction process. The cut-off bid price, at which GOP decides to accept bids, in the re-opening auction will apply uniformly to all accepted bids.

The Non-Competitive Bids (NCBs) of reopened GIS will be accepted at cut-off bid price determined through cut-off in the competitive price auction. Successful PDs will be required to execute transaction documents of GIS before the settlement date.

Copyright Business Recorder, 2020