The Government of Pakistan raised Rs301.947 billion in face value through its latest Government of Pakistan Hybrid Sukuk auction conducted through the Pakistan Stock Exchange (PSX) Auction System on October 15, 2026. The amount fell short of the combined pre-auction target of Rs350 billion, although demand for the securities varied across different tenors and instrument types. The auction included fresh issues of Fixed Rate Discounted Government of Pakistan Hybrid Sukuk with maturities of three months, six months and one year, alongside a 10-year Variable Rental Rate Hybrid Sukuk. While the short-term discounted instruments generated a total acceptance of Rs80.722 billion, the long-term variable rental rate instrument attracted significantly higher bids and secured an acceptance of Rs221.225 billion, exceeding its individual target of Rs200 billion.
For the Fixed Rate Discounted Government of Pakistan Hybrid Sukuk, the government invited tenders against a pre-auction target of Rs150 billion across the three available maturities. The auction attracted bids with a combined face value of Rs286.587 billion, indicating substantial investor interest in the discounted securities. However, the government accepted a total of Rs80.722 billion through competitive and non-competitive bids combined. Of this amount, Rs76.145 billion came through competitive bids, while another Rs4.576 billion was accepted through non-competitive bids. The resulting acceptance remained considerably below the target set for the short-term instruments, contributing to the overall shortfall in the auction.
The three-month Fixed Rate Discounted Hybrid Sukuk recorded the highest acceptance among the short-term instruments. The government accepted Rs54.769 billion through competitive bids at a cut-off price of 97.3235 and a cut-off yield of 11.9499%. An additional Rs2.752 billion was accepted through non-competitive bids at a weighted average price of 97.3329 and a weighted average yield of 11.9068%, bringing total acceptance for the three-month tenor to Rs57.521 billion. The one-year instrument secured Rs19.939 billion through competitive bids at a cut-off price of 88.9160 and a cut-off yield of 12.4999%. A further Rs809 million was accepted through non-competitive bids, taking the total acceptance for the one-year tenor to Rs20.748 billion. The six-month tenor recorded the lowest acceptance, with Rs1.437 billion accepted through competitive bids at a cut-off yield of 12.2502%, alongside Rs1.015 billion through non-competitive bids. Total acceptance for the six-month instrument stood at Rs2.452 billion.
The 10-year Variable Rental Rate Government of Pakistan Hybrid Sukuk attracted stronger demand, with total bids reaching Rs535.1 billion against a pre-auction target of Rs200 billion. The instrument’s reference or coupon rate for the first period was set at 12.1179%. Following the bidding process, the government accepted Rs221.225 billion in face value, exceeding its initial target by Rs21.225 billion. Competitive bids accounted for Rs220.060 billion of the accepted amount, with a cut-off price of 98.4505 and a cut-off yield of 12.3924%. The remaining Rs1.165 billion was accepted through non-competitive bids at a weighted average price of 98.5187 and a weighted average yield of 12.3802%. The high volume of bids received for the 10-year instrument made it the largest contributor to the total amount raised in the auction.
The difference in acceptance between the short-term discounted instruments and the 10-year variable rental rate Sukuk highlights the varied demand across the government’s financing options. Although investors submitted bids exceeding the targets for both the short-term and long-term categories in aggregate, the final acceptance amounts differed considerably. The government accepted substantially less than the Rs150 billion target for the discounted instruments, while accepting more than the Rs200 billion target for the 10-year Sukuk. The results demonstrate that the government used different levels of acceptance across maturities rather than meeting each instrument’s target in full. The auction figures, however, do not independently establish the reasons behind the acceptance decisions or the preferences of individual investors.
Hybrid Sukuk form part of the government’s financing instruments and provide an avenue for raising funds through securities structured around Islamic finance principles. The latest auction offered investors a range of maturities, from three-month discounted securities to a 10-year variable rental rate instrument. Such differences allow the government to access financing across different time horizons while providing investors with alternatives based on maturity and the terms of each security. The variable rental rate structure also differs from the discounted instruments in how its rental payments are determined, making the terms of each issuance important when assessing its financial characteristics.
The October 15 auction concluded with total acceptance of Rs301.947 billion against the combined target of Rs350 billion, leaving a shortfall of Rs48.053 billion. The 10-year Variable Rental Rate Hybrid Sukuk accounted for Rs221.225 billion of the amount raised, while the Fixed Rate Discounted Hybrid Sukuk contributed Rs80.722 billion. The results provide an update on the government’s financing activity through the PSX Auction System and show that the long-term instrument exceeded its target even as acceptance of the short-term securities remained below the amount initially planned. Further assessment of the government’s borrowing position would require comparison with other debt auctions, repayment obligations and the broader public financing requirements.
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