By Moaaz Manzoor

The federal government raised Rs239.325 billion through the inaugural issuance of short-term Government of Pakistan Hybrid Sukuk, introducing three-month and six-month Shariah-compliant instruments to broaden funding options in the domestic Islamic debt market.

According to a statement issued by the Pakistan Stock Exchange, the auction held on July 22 received bids with a total face value of Rs770.234 billion, equivalent to a realised value of Rs741.287 billion.

The Ministry of Finance accepted approximately 32% of the total realised value of bids across the four tenors in the auction.

Of the total amount raised, Rs162.796 billion was accepted through discounted Sukuk instruments carrying maturities of three months, six months and one year. The remaining Rs76.529 billion was raised through the 10-year Variable Rental Rate Sukuk.

The introduction of three-month and six-month Sukuk expands the range of tenors available under the government’s Islamic financing programme. The PSX said the shorter-duration instruments would provide additional investment avenues, support liquidity management in the Islamic financial system and contribute to the development of the domestic Shariah-compliant debt market.

The three-month discounted Sukuk recorded a cut-off price of Rs97.4218 and a cut-off yield of 11.4994%. Its weighted average price stood at Rs97.4345, while the weighted average yield was 11.4413%.

For the six-month discounted Sukuk, the cut-off price was set at Rs94.4920 and the cut-off yield at 11.6902%. The weighted average price and yield stood at Rs94.5462 and 11.5685%, respectively.

The one-year discounted instrument carried a cut-off price of Rs89.4394 and a cut-off yield of 11.8400%. Its weighted average price was Rs89.5091, with a weighted average yield of 11.7526%.

The 10-year Variable Rental Rate Sukuk recorded a cut-off price of Rs98.8919 and a cut-off yield of 11.5803%. Its weighted average price stood at Rs99.0213, while the weighted average yield was 11.5580%.

The statement said the reference or coupon rate for the 10-year Variable Rental Rate Sukuk was 11.3904%.

The issuance was accompanied by a revised allocation methodology based on a non-uniform pricing mechanism. Under the revised arrangement, competitive bidders receive allocations at their accepted bid prices or yields, while non-competitive bidders are allotted securities at the weighted average accepted price or yield.

The mechanism applies to all government Sukuk issued through the PSX, including Fixed Rate Discounted, Fixed Rental Rate, Variable Rental Rate and Fixed Rate Zero Coupon instruments.

According to the PSX, the revised methodology is intended to improve price discovery, enhance transparency and provide a wider range of investors with access to government-backed Islamic securities.

The issuance was completed by the Ministry of Finance in collaboration with the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan.

The joint financial advisers were BankIslami Pakistan Limited, Dubai Islamic Bank and Bank Alfalah Limited, led by Meezan Bank Limited. The PSX, National Clearing Company of Pakistan Limited and Central Depository Company of Pakistan Limited provided the capital-market infrastructure for the transaction.

The inaugural short-term issuance gives the government access to Shariah-compliant financing across a wider range of maturities while adding new liquidity-management instruments for Islamic banks and other investors.

Credit: INP-WealthPk