The Government of Pakistan has successfully mobilized Rs309.59 billion through its latest primary market auction of GoP Ijarah Sukuk (GIS), significantly exceeding the auction target of Rs250 billion. The auction, conducted on October 14, 2025, witnessed robust investor interest, highlighting growing demand for Shariah-compliant financial instruments in the domestic debt market.
According to auction details, total bids received across all tenors reached a face value of Rs1,056.5 billion, reflecting a strong appetite from both institutional and individual investors. The bulk of the funds raised came through Fixed Rental Rate (FRR) instruments and the 10-Year Variable Rental Rate (VRR) Sukuk, indicating a preference for longer-tenor instruments offering stable returns.
The government accepted a total of Rs306.86 billion in competitive bids and Rs2.74 billion in non-competitive bids. This oversubscription underscores increasing market confidence in Islamic debt instruments and their role in diversifying the government’s funding portfolio.
The largest contribution came from the GIS 05-Year FRR Sukuk, which raised Rs104.10 billion at a cut-off rental rate of 11.13 percent and a cut-off price of 100.03. This exceeded the category’s initial target of Rs50 billion, making it the most significant component of the auction.
The GIS 10-Year Zero Coupon Sukuk also witnessed substantial demand, with the government accepting Rs77.01 billion against a target of Rs25 billion. The cut-off price for this instrument stood at 32.63 with a cut-off rental of 11.85 percent, reflecting investor willingness to lock in longer-term instruments despite a rising rate environment.
The GIS 03-Year FRR raised Rs30.71 billion at a cut-off rental rate of 10.82 percent and a cut-off price of 99.82, meeting and exceeding its target of Rs25 billion. Meanwhile, the 1-Year Discounted IJARAH Sukuk attracted bids worth Rs229.42 billion, of which Rs66.59 billion was accepted at a cut-off rental rate of 10.43 percent and a price of 90.58.
In the Variable Rental Rate category, results were more mixed. The GIS 10-Year VRR Sukuk successfully raised Rs31.18 billion at a cut-off price of 100.00. However, despite receiving bids worth Rs58.43 billion, all bids for the GIS 05-Year VRR were rejected, indicating the government’s strategic decision to manage cost of borrowing and structure of its debt portfolio.
Analysts note that the strong demand for Ijarah Sukuk reflects a continued shift toward Shariah-compliant investment products in Pakistan’s financial markets. With returns competitive against conventional instruments, Sukuk has become a key tool in the government’s domestic borrowing program, allowing it to diversify funding sources and meet financing needs through a more balanced debt structure.
The auction results also point to strong liquidity in the market, with investors showing confidence in longer-term instruments despite broader macroeconomic challenges. This aligns with the government’s strategy to expand the Islamic finance segment and encourage broader participation from financial institutions and retail investors.
The success of this auction is expected to support the government’s medium-term financing goals and enhance the depth of the local Islamic debt market. Future issuances of Ijarah Sukuk are likely to continue playing a critical role in funding fiscal needs while supporting the growth of the country’s Islamic finance ecosystem.
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