Pakistan issued the much-awaited $1 billion Ijara Sukuk in the global market on Monday, 24 January.
The dollar-denominated Islamic bond comes with a 7.95 percent yield payable on a semi-annual basis and a seven-year time to maturity up to 31 January 2029.
The brand new Sukuk bond which was listed on the London Stock Exchange yesterday is one of the most premium Islamic papers Pakistan has issued in recent years.
The erstwhile five-year Islamic debt instrument had been secured at a 5.6 percent return in December 2017. It matured last month and had to be replaced by a new paper, this time with a seven-year time to maturity and an improved 7.95 percent return.
The Spokesperson for the Ministry of Finance, Muzammil Aslam, told ProPakistani, “It is on the higher side. However, the international debt capital bond market across countries has been completely shocked since last December due to the expected increase in interest rates in the US and Europe. So, given the situation, we have got a good deal given the time”.
No official announcement was made about the bond’s prospectus launch because of an arrangement with bookrunners and financial managers. Pakistani authorities (the customer) were not allowed to make any public statements about the transaction.
Pakistan identified four international banking institutions, namely Credit Suisse, Deutsche Bank, Dubai Islamic Bank, and Standard Chartered Bank, as Joint Lead Managers (JLMs) and Joint Bookrunners (JBRs) last week to organize a series of investor calls for the issuance of the seven-year Islamic paper.
As envisaged earlier, the benchmark seven-year offering is US dollar-denominated and has been proposed under the Trust Certificate Issuance Programme of The Pakistan Global Sukuk Programme Co., by committing a couple of motorway projects of the National Highway Authority (NHA).
Last week, Moody’s Investors Service (Moody’s) assigned a B3-backed senior unsecured rating to the proposed US dollar-denominated Sukuk issuance by the Government of Pakistan. Subsequently, Fitch Ratings also assigned Pakistan’s proposed US-dollar sovereign global Sukuk certificates a ‘B’- rating.
The government intends to raise around $3 billion from the international capital market through the instrument. The cost of an Islamic bond is generally lower than the cost of a standard Eurobond, and authorities expect to reap a considerable portion of the debt instrument’s full amount during the current fiscal year.
Source: Pro Pakistani