Govt generates Rs371bn in sukuk issuance which is largest in single auction
Business
Target was Rs240bn
KARACHI (Web Desk) – The cash-starved government managed to generate Rs371 billion (over $1.29bn) in the country's record sale of Ijarah Sukuk, which made it the largest issuance of Islamic bonds in a single auction, against a target of Rs240bn.
The record yield since the launch of Sukuk programme in 2008 was due to a strong demand from local Islamic banks.
Sources say the government raised the amount via the settlement of Sukuk on August 7 after various banks participated in the auction held last week.
Six denominations were open for bidding in the Sukuk including included one-year, three-year, and five-year fixed-rate as well as one-year, three-year and five-year variable-rate.
The government intended to raise a total of Rs240 billion from the auctions, however, the Sukuks were oversubscribed by over 200pc, with total bids received equivalent to over Rs508bn (approximately $1.77bn).
On the basis of the announced cut-off rates, Sukuk equivalent to Rs371bn were issued under five denominations, while all bids were rejected against the five-year fixed rate denomination.
The rental rate against the above Sukuk varied from 18.49pc per annum to 23.62pc per annum, depending on the tenure of the Sukuk. The rental payment is to be made on a half-yearly basis with Sukuk redemption at maturity.
The underlying asset utilized for Sukuk issuance was Islamabad Expressway, on which an Ijarah Sale and Lease Back transaction was performed.
