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Karachi, Meezan Bank has played a pivotal role as the lead Joint Financial Advisor in the first-ever listed Ijarah Sukuk Issuance for the Government of Pakistan (GoP). This groundbreaking issuance, carried out through the Pakistan Stock Exchange (PSX), marks a significant step in providing retail investors with access to Shariah-compliant government securities.
According to Meezan Bank Limited, the Ijarah Sukuk, with denominations of PKR 5000/-, was issued in collaboration with other Joint Financial Advisors including Dubai Islamic Bank (Pakistan) Limited, Bank Alfalah Limited, and Bank Islami Pakistan Limited. The inaugural auction held on December 8, 2023, and settled on December 11, 2023, aimed to raise PKR 30 billion but exceeded expectations, being oversubscribed by over 13 times the participated realized value. The cutoff yield for this Sukuk was established at 19.5%.
The Sukuk has a tenor of 364 days, offering a short-term investment opportunity that aligns with Shariah principles. This issuance is the first in a series of three auctions announced by the Ministry of Finance, with the subsequent auctions scheduled for January and February 2024.
The successful auction not only demonstrates strong demand for Shariah-compliant investments but also opens the door for retail investors to participate in ethical financial instruments. The overwhelming response to the auction reflects investor confidence in Pakistan’s economic stability. Notably, the Government of Pakistan was able to raise funds at a rate nearly 2.5% lower than the prevailing Policy Rate, resulting in savings of PKR 750 million in this single issuance.
The inauguration ceremony at the Pakistan Stock Exchange, graced by the caretaker Prime Minister Mr. Anwar ul Haq Kakar and Finance Minister Dr. Shamshad Akhtar, underscored the government’s commitment to promoting Islamic finance and inclusivity in the financial markets. This event marks a significant step towards the GoP’s goal of transitioning to a Riba-free economy as mandated by the Federal Shariat Court. Meezan Bank continues to lead in Islamic finance, fostering financial inclusivity and developing innovative financial solutions.
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