KARACHI: The State Bank of Pakistan (SBP) has successfully raised Rs5.547 billion through the sale of 1-year, 3-year, and 5-year GOP Ijara Sukuk (GIS) Variable Rental Rate (VRR) and GIS Fixed Rental Rate (FRR) in an auction.
According to the central bank, the auction received bids worth Rs10.663bn for the GIS VRR with a price range of -50 basis points (bps) to 200bps for 1-year, 100bps for 3-year, and 100bps to 96bps for 5-year, respectively.
Out of the total bids received, SBP accepted a total of Rs5.546bn from which Rs5.514 was accepted at zero cut-off margins for 1 year, Rs28.68 million at 100bps for 3 years, and Rs3.15mn at 100bps for 5 years.
Meanwhile, bids worth Rs3mn were received for the GIS FRR with a fixed rental range of 17.50% for 1 year, and 17.10% for 3 years, out of which the SBP accepted Rs500,000 for 1 year at a cut-off rental rate of 17.50%.
The tender for the sale of 1-year, 3-year, and 5-Year GIS VRR and GIS FRR was invited by the central bank through designated primary dealers, and the settlement date for the successful bids is February 20, 2023.
The successful auction is expected to help the government in raising funds for its various development projects and also provide an attractive investment opportunity for investors looking for halal investment options.
The SBP has been actively promoting the use of shariah-compliant instruments such as Sukuk to meet the growing demand for such products in the country.
To note, the government on Wednesday decided to issue Government of Pakistan (GOP) Ijara Sukuk (GIS) with further flexibility in terms of tenor (including one year and above), as per the structure described in the Addendum Note to the Transaction Structure, the circular issued by the central bank on Tuesday to inform presidents and chief executives of all banks, DFIs, and NBFIs.
“The GIS auction details such as target amount, tenor, rental rate (variable or fixed) and auction schedule, etc. will be announced by SBP on Refinitiv/Bloomberg SBPK pages,” it added.
All other instructions regarding the auction of GIS in the aforementioned circulars and issued by SBP from time to time will remain unchanged.
For the unversed, subsequent to the issuance of the first Ijarah Sukuk issue if the GOP is in need of additional funds and instead of issuance of a new Sukuk wishes to raise new funds by way of re-opening, then the State Bank of Pakistan will conduct an auction for the reopening of the existing Sukuk Issue.
