The Government of Pakistan has successfully raised Rs31.99 billion through a fresh issuance of the 3-Year Variable Rate Green Ijarah Sukuk (GIS-VRR), reflecting a strong investor appetite for environmentally sustainable financial instruments. The auction results, announced on May 16, 2025, demonstrate Pakistan’s continued commitment to fostering green finance while expanding the Islamic capital market.
The auction was conducted on the Pakistan Stock Exchange (PSX) with a targeted pre-auction amount of Rs30 billion. The issue and settlement date for the sukuk is set for May 19, 2025, with maturity scheduled for May 19, 2028, marking a three-year tenor for this latest green finance instrument.
Bids for the green sukuk showed remarkable enthusiasm, with total offers amounting to Rs161.74 billion in face value — significantly exceeding the government’s target. Despite this oversubscription, the government accepted Rs31.99 billion worth of bids, consisting of Rs31.13 billion from competitive bids and Rs860 million through non-competitive bids.
All accepted bids were settled at a cut-off margin of -61 basis points over the benchmark 6-month weighted average of Market Treasury Bills, which currently stands at 11.2464%. This pricing translates to a net rental rate of 10.6364% for investors, providing an attractive return linked to market rates while supporting green projects.
This fresh sukuk issuance highlights Pakistan’s strategic push to deepen its Islamic finance market, especially by aligning investment opportunities with sustainable development goals. The government has been increasingly focused on utilizing Islamic finance tools like sukuk to fund environmentally responsible infrastructure and clean energy projects, aiming to support the country’s transition towards a greener economy.
Green sukuk, by definition, raise capital for projects that contribute to environmental protection, renewable energy, water conservation, and other eco-friendly initiatives. Pakistan’s issuance of green sukuk resonates with global trends where sustainable finance is becoming a priority for governments and investors alike, seeking to balance economic growth with environmental responsibility.
The success of this auction also reflects growing investor confidence in Pakistan’s financial instruments and policy frameworks that promote transparency and sustainability. It aligns with previous green sukuk issuances by the government, reinforcing the country’s reputation as a pioneer in the Islamic green finance space within the region.
Experts believe that such financial innovations not only attract diverse investor groups but also help channel much-needed funds into sectors critical for Pakistan’s sustainable development, including renewable energy infrastructure, climate resilience projects, and pollution reduction efforts.
Looking ahead, the government’s focus on green sukuk and other Shariah-compliant financial products is expected to accelerate, paving the way for enhanced participation from both local and international investors who are increasingly prioritizing ESG (Environmental, Social, and Governance) criteria in their portfolios.
Pakistan’s success in raising Rs32 billion through this green sukuk auction signals a positive trajectory for the country’s economic growth while underscoring the vital role of sustainable finance in achieving long-term environmental and social objectives.