Pakistan sells Ijarah Sukuk worth PKR 138 billion in first auction of 2025

Pakistan government has raised PKR 138 billion in its first Ijarah Sukuk auction of 2025 against a target of PKR 250 billion.

The auction received bids totaling PKR 536 billion.

The one-year yield dropped to 10.42% from 11% in the last auction on December 3 and 19.5% compared to the same month last year.

Yields on three-year fixed-rate sukuk remained steady at 11.5%, while five-year fixed-rate sukuk yields declined by 10 basis points to 11.99%. The 10-year yields also remained flat at 11.7%.

In 2024, the government raised PKR 2 trillion from Sukuk auctions through the PSX auction system across 15 auctions. The largest amount was raised in the final auction of 2024 on December 3, fetching PKR 353 billion, with 60% of the funds raised in 10-year Sukuk.

Overall, the government received participation of PKR 6.2 trillion against a total target of PKR 2.1 trillion, raising PKR 2 trillion.

In October 2023, the caretaker federal cabinet approved amendments to the Government of Pakistan Market Treasury Bills 1998 and Government of Pakistan Ijara Sukuk Rules 2008.

These amendments aimed to enhance efficiency and provide flexibility for the issuance, registration, trading, and transfer of government securities through any institution.

The changes were also intended to expand the government's investor base, make participation easier for diversified investors, including retail investors, and ultimately reduce the cost of borrowing by increasing the subscriber base.