The Government of Pakistan will auction a 1-year Ijarah Sukuk to raise Rs. 30 billion at the Pakistan Stock Exchange on Friday, 8 December 2023.
This will be the first time such a bond auction will be conducted at the main bourse. “In a major development, the Government of Pakistan has decided to conduct 1-year Ijarah Sukuk Auction at the Pakistan Stock Exchange (PSX) on Friday (Dec 8, 2023). This is the first time such a bond auction will happen at PSX. Earlier banks used to do this,” Topline Securities Mohammed Sohail CEO said on Thursday.
He said the government is targeting a raise of Rs. 30 billion ($105 million) through the Islamic paper at a discount (zero coupon). “These bonds will also trade at PSX and will help in the much-needed development of the bond market in Pakistan Now, thousands of retail investors who invest in stocks through Brokers can also buy these Sukuks. We expect the yield on these Sukuks to be between 20-22% in Friday auction,” he added.
PSX is expected to see large volumes in terms of investor turnover for the Sukuk auction as both institutions and the general people are tipped to participate in the process.
The expectation is the bond will be sold and traded by all 200 stockbrokers and commercial banks on the main bourse.
High-net-worth individuals might also invest in Islamic bonds through certain banks.
The government intends to raise Rs. 90 billion through the auction of GOP Ijarah Sukuk from December 2023 to February 2024. The central bank intends to hold three auctions between December 2023 and February 2024, with one auction scheduled for each month.
Auction Calendar Details
The first auction is set for December 8, with a Rs. 30 billion objective and a settlement date of December 11, 2023.
The second auction will take place on January 23, 2023, with the same Rs. 30 billion aim and settlement on January 24, 2023.
The third auction to raise Rs. 30 billion is scheduled for February 2024 through the sale of GOP Ijara Sukuk.
Auction Date Signing of Subscription Undertaking Settlement Date Target Auction Size – Rounded Off
8-Dec-23 11-Dec-23 11-Dec-23 Rs. 30 billion
23-Jan-24 24-Jan-24 24-Jan-24 Rs. 30 billion
20-Feb-24 21-Feb-24 21-Feb-24 Rs. 30 billion
It is noteworthy that PSX was authorized to conduct primary market issuances of government debt securities under the new system from December 2023 onwards.
Source: Pro Pakistani
