KARACHI: The government on Wednesday raised Rs116.4 billion in face value through the first auction of the Government of Pakistan Hybrid Sukuk (GHS), conducted through the Pakistan Stock Exchange (PSX) Auction System, in an effort to broaden Sharia-compliant funding avenues and deepen the debt capital market.
The auction witnessed strong investor participation, with total bids received amounting to Rs290.29 billion in face value and Rs280.482 billion in realised value, according to the notice from the PSX.
Meezan Bank, as the lead joint financial advisor, played a pivotal role in structuring and executing this landmark issuance alongside Dubai Islamic Bank Pakistan, BankIslami Pakistan Limited, and Bank Alfalah Islamic, demonstrating strong collaboration among leading Islamic financial institutions.
The sukuk auction comprised two innovative Shariah-compliant instruments. The one-year fixed-rate discounted Sukuk achieved a cut-off rate of 11.8 per cent, representing an increase of 30.01 basis points (bps), while the 10-year variable rental- rate Sukuk was priced at 11.7185 per cent, based on a reference rate of 11.3685 per cent with a spread of 35bps. These competitive rates highlight continued investor appetite across both short-term and long-term Islamic sovereign instruments.
According to bankers, this transaction is historic and first-of-its-kind in Pakistan, as it combines Murabaha and Ijarah structures into a single sovereign Hybrid Sukuk framework. The innovative design significantly broadens the government’s Shariah-compliant funding avenues while contributing to the deepening and sophistication of Pakistan’s domestic Islamic debt capital market.
The successful launch of the hybrid sukuk also aligns with Pakistan’s national agenda to accelerate the conversion towards an Islamic banking and finance system by January 2028, in line with constitutional and policy commitments to eliminate interest-based financing. A key challenge in this transition remains the conversion of the government’s domestic debt portfolio into Shariah-compliant instruments, making sovereign Sukuk issuances such as the hybrid sukuk critically important for creating sustainable alternatives to conventional borrowing.
