Government raises Rs138 billion in first Ijarah Sukuk auction of 2025

KARACHI: In its initial Ijarah Sukuk auction of 2025, the Pakistani government successfully raised Rs138 billion, falling short of the Rs250 billion target. The auction attracted bids totalling Rs536 billion. The one-year yield saw a decrease to 10.42 percent, down from 11 percent in the previous auction held on December 3, and significantly lower than the 19.5 percent from the same month a year ago.

Yields for three-year fixed-rate sukuk remained unchanged at 11.5 percent, while five-year fixed-rate sukuk yields fell by 10 basis points to 11.99 percent. Yields for 10-year sukuk also held steady at 11.7 percent. In 2024, the government secured Rs2 trillion through Sukuk auctions via the PSX auction system across 15 sessions.

The highest amount raised was in the final auction of 2024 on December 3, which garnered Rs353 billion, with 60 percent of the total coming from 10-year sukuk.

Overall, the government received bids amounting to Rs6.2 trillion against a total target of Rs2.1 trillion, successfully raising Rs2 trillion.

In October 2023, the caretaker federal cabinet approved revisions to the Government of Pakistan Market Treasury Bills 1998 and the Government of Pakistan Ijara Sukuk Rules 2008. These amendments were designed to improve efficiency and provide flexibility in the issuance, registration, trading, and transfer of government securities through various institutions.

The aim was also to broaden the government’s investor base, facilitate participation for a diverse range of investors, including retail investors, and ultimately lower borrowing costs by increasing the number of subscribers.