Govt Raises Rs114 Billion Through Hybrid Sukuk Auction

The Government of Pakistan on Wednesday raised Rs114.347 billion through the third auction of its Hybrid Sukuk, marking the second such issuance in the current month, amid strong investor demand for Shariah-compliant instruments.

Meezan Bank Limited acted as the Lead Joint Financial Advisor (JFA) for the transaction, playing a key role in structuring and executing the issuance. The bank’s involvement reflects its continued leadership in Pakistan’s Islamic capital markets and its support for sovereign fundraising initiatives.

The auction, conducted through the Pakistan Stock Exchange (PSX) on behalf of the Ministry of Finance (MoF), attracted robust participation, with total bids reaching Rs354.395 billion (face value), translating into a realized value of Rs344.716 billion.

According to auction results, the cut-off yield for the one-year fixed-rate (discounted) Sukuk was set at 12.00 percent, up by 20 basis points compared to the previous level.

For the longer tenor, the 10-year Variable Rental Rate (VRR) Sukuk was priced at 11.7568 percent, offering a spread of 38.83 basis points over the reference rate of 11.3685 percent.

Market participants attributed the strong response to improving liquidity conditions and sustained appetite among institutional investors for Islamic investment avenues, particularly sovereign Sukuk offering diversified return structures.

The Hybrid Sukuk, which combines fixed and floating rate features, is designed to broaden the government’s Shariah-compliant borrowing base while providing flexibility to investors with varying risk-return preferences.

The latest auction reinforces the government’s strategy to deepen the domestic Sukuk market and mobilize funding through innovative Islamic financial instruments.