The government raised a total of Rs. 371 billion (over $1.29 billion) through GOP Ijarah Sukuk against Islamabad Expressway.
This was the highest issuance of Sukuk in a single auction by the government since the start of the GOP Ijarah Sukuk program in 2008 which surged the overall Sukuk value up to Rs. 3.5 trillion.
According to the details, various banks participated in the recent auction for investment in GOP Ijarah Sukuk. 6 denominations were open for bidding in the Sukuk which included 1,3 and 5 Year Fixed Rate Sukuk and 1,3 and 5 Year Variable Rate Sukuk.
The government intended to raise a total of Rs. 240 billion from the auctions, however, the Sukuk attracted a recorded amount and oversubscribed by over 200% with total bids received equivalent to over Rs. 508 billion (approximately $1.77 billion).
On the basis of the announced cutoff rates, Sukuk equivalent to Rs. 371 billion were issued under 5 denominations as per the following details while all bids were rejected against the 5 Year Fixed Rate denomination.
| 1 Year VRR | Â Rs. 100.346 billion |
| Â Â 1 Year FRR | Â Rs. 2.161 billion |
| Â Â 3 Year VRR | Â Rs. 5.000 billion |
| Â Â 3 Year FRR | Â Rs. 68.385 billion |
| Â Â 5 Year VRR | Â Rs. 195.250 billion |
| Â Â Total Accepted Amount | Â Rs. 371.142 billion |
The rental rate against the above Sukuk varied from 18.49 percent per annum to 23.62 percent per annum depending on the tenure of the Sukuk. The rental payment is to be made on a half-yearly basis with Sukuk redemption at maturity.
The underlying asset utilized for Sukuk issuance was Islamabad Expressway on which an Ijarah Sale and Lease Back transaction was performed. The underlying Shariah Structure of the Sukuk was approved by the Shariah Advisory Committee of the State Bank of Pakistan while the transaction was led by Meezan Bank Limited alongside Dubai Islamic Bank Pakistan Limited and Bank Alfalah Limited as Joint Financial Advisors to the transaction.
The enhanced participation of the banks in the Sukuk amount not only increases the profitability of the Islamic banks but also causes savings to the government for raising capital for the financing of different projects or expenses at comparatively less profit rates, hence it is a win-win situation.
In 2023 so far, the government raises an amount of Rs. 700 billion against different projects, which is also a historical record in the banking industry.
Director Center of Islamic Finance and Economics at IBA Ahmed Siddiqui said the growing trend of utilizing the option of Sukuk for raising funds is a step in the direction towards promoting the cause of elimination of the Riba-based economy.
He added that Sukuk is an instrument to support the effort of the government for the conversion of the Riba-based economy towards Sharia-based. The increasing trend of the government towards utilizing the Sukuk option will also be good for the economy and Islamic capital markets, he said.
