The Government of Pakistan successfully raised Rs228.99 billion through the latest auction of Ijara Sukuk bonds conducted via the Pakistan Stock Exchange (PSX), exceeding its initial target of Rs200 billion. The strong investor response highlights growing demand for Shariah-compliant financial instruments in the domestic market.
According to details released by the local bourse, bids worth Rs626.85 billion were received across various Sukuk categories, significantly surpassing the government’s requirement. The auction comprised three key instruments: GIS Fixed Rental Rate (FRR), GIS Variable Rental Rate (VRR), and GIS Fixed Return (FRD).
Out of the total, bids of Rs91.7 billion were received for the 1-year GIS FRD, Rs327.89 billion for GIS VRR, and Rs207.21 billion for GIS FRR. From the aggregate FRD bids, Rs67.12 billion was accepted, including Rs62.63 billion through competitive bidding and Rs4.48 billion from non-competitive bids. The cut-off price for this tranche was set at Rs90.56, translating into a rental yield of 10.45 percent.
For the GIS VRR segment, the government mobilized Rs207.21 billion. This included Rs64.05 billion through 5-year Sukuk and Rs143.16 billion from the 10-year variable rental rate Sukuk. Within this category, Rs25.5 billion was raised via competitive bids, while Rs375.77 billion came from non-competitive submissions, underscoring the strong preference for longer-tenor Shariah-compliant securities.
Meanwhile, the GIS FRR attracted total bids worth Rs327.89 billion. From this pool, Rs60.3 million was accepted for the 3-year Sukuk, Rs57.34 billion for the 5-year paper, and Rs210 billion for the 10-year Sukuk, marking one of the largest individual allocations in the auction.
The consolidated data reflects that out of Rs222.16 billion accepted from competitive bids, Rs6.82 billion was taken from non-competitive bids, taking the total mobilization to Rs228.99 billion. This outcome once again emphasizes the deepening role of the Islamic finance ecosystem in Pakistan’s domestic debt market, where Sukuk issuances have become a central instrument for government fundraising.
Analysts suggest that the high level of participation, with bids more than three times the set target, reflects the liquidity position of the market as well as the appetite of both institutional and retail investors for Shariah-compliant products. For the government, Sukuk not only provide an alternative to conventional borrowing but also help in broadening the investor base, particularly those institutions with mandates to invest in Islamic instruments.
The auction results signal a positive trajectory for Pakistan’s Islamic finance market, which has been witnessing steady growth in recent years. As the government continues to rely on Sukuk to meet part of its budgetary financing needs, experts believe that sustained demand from banks, funds, and corporates could further enhance the depth of the market.
By crossing its target and raising nearly Rs229 billion, the government has once again reinforced the importance of Sukuk as a reliable fundraising mechanism while also contributing to the advancement of Shariah-compliant finance in the country.