ISLAMABAD: In bid to strengthen governance and broaden their appeal to investors, the Securities and Exchange Commission of Pakistan (SECP) has issued regulations for issuance of Sukuk (Islamic bonds) instruments ie ‘Issue of Sukuk Regulations, 2015’.
The regulator first drafted the rules in October 2012, but efforts have accelerated under a five-year plan that authorities hope will double the industry’s share of the banking sector to 20 percent by 2020.
The rules come at a time when issuance of corporate sukuk in Pakistan is gathering pace, helping broaden an Islamic capital market which in recent years has relied on the government for the bulk of such deals.
The current pipeline of sukuk includes utility K-Electric, which is planning a sukuk worth Rs22 billion ($217 million), which would be the country’s largest corporate sukuk to date.
Pakistan Mobile Communications (Mobilink) and Bank Islami Pakistan also plan sukuk of their own. Under the rules, sukuk will have to be structured to comply with standards of the Bahrain-based Accounting and Auditing Organisation for Islamic Finance Institutions (AAOIFI), as well as those set by the local regulator.
AAOIFI standards indicate how Islamic financial products should be structured; complying with the standards could increase the appeal of sukuk to investors by addressing consumer concerns about their religious authenticity.
