Pakistan Government on Wednesday raised Rs114.347 billion through the third auction of its Hybrid Sukuk, marking the second such issuance this month amid strong investor demand for Shariah-compliant financial instruments.
The auction was conducted through the Pakistan Stock Exchange (PSX) on behalf of the Ministry of Finance (MoF) and attracted significant interest from investors, reflecting growing confidence in Islamic investment products and improving liquidity conditions in the domestic market.
According to the auction details, total bids reached Rs354.395 billion in face value, translating into a realized value of Rs344.716 billion.
Meezan Bank Limited acted as the Lead Joint Financial Advisor (JFA) for the transaction and played a central role in structuring and executing the issuance.
The bank’s participation highlights its continued position in Pakistan’s Islamic capital markets and its involvement in sovereign fundraising initiatives aimed at expanding Shariah-compliant financing avenues.
Cut-Off Yields Announced for Fixed and Variable Sukuk
The auction results showed that the cut-off yield for the one-year fixed-rate (discounted) Sukuk was set at 12.00%, reflecting an increase of 20 basis points from the previous level.
Meanwhile, the 10-year Variable Rental Rate (VRR) Sukuk was priced at 11.7568%, offering a spread of 38.83 basis points over the reference rate of 11.3685%.
Investor Appetite for Islamic Instruments Remains Strong
Market participants attributed the strong response to sustained institutional demand for Islamic investment avenues, particularly sovereign Sukuk offerings that provide diversified return structures.
The Hybrid Sukuk combines fixed and floating rate features, enabling the government to broaden its Shariah-compliant borrowing base while offering flexibility to investors with varying risk-return preferences.
Analysts view the continued success of such auctions as a sign of increasing depth in Pakistan’s Islamic finance sector, which has seen rising participation from banks, asset managers, and other institutional investors.
The latest issuance reinforces the government’s broader strategy to deepen the domestic Sukuk market and mobilize funding through innovative Islamic financial instruments.
With investor interest remaining robust, policymakers are expected to continue leveraging Sukuk-based financing to diversify funding sources and support long-term fiscal management objectives.