Government to raise Rs 100 billion via domestic Sukuk in September
KARACHI: The government plans to raise Rs 100 billion through the five-year Ijara Sukuk auction this month against three identified assets, the central bank said on Monday, responding to a long-standing demand from the Islamic banking sector.
The government expects to raise 75 billion rupees through the auction of the variable rental rate of Pakistani government Ijara Sukuk. This Sukuk will be auctioned on September 30, according to the auction schedule.
The State Bank of Pakistan (SBP) will also sell Sukuk at a fixed rental rate valued at Rs25 billion. The auction of this bond will also take place on the same date.
The assets for the issuance include the M-1 (Islamabad-Peshawar highway), highway lands as well as all related constructions and improvements of the M1 (Islamabad-Peshawar highway).
M-4 (Pindi Bhatian-Faisalabad highway) highway and all related constructions and improvements, M-4 (Pindi Bhatian-Faisalabad highway) and E-35 (Hassanabdal-Mansehra highway) highway as well as all the constructions and improvements of the E-35 (Hassanabdal – Mansehra highway).
The issuance of the Sukuk was the most important demand of the Islamic banking industry.
Bankers expect this decision to provide the necessary impetus for investments by Islamic banks for the proper use of excess deposits.
The government issues conventional debt instruments such as Treasury bills and Pakistani investment bonds on a regular basis and on schedule. The regular issuance of national sukuk is likely to provide a level playing field with conventional banks.
The SBP will conduct an auction through which Sukuk investors will be identified. Non-competitive bidders may also submit their bid for the Sukuk. To this end, non-competitive bidders will authorize one of the lead bidders by signing an authorization form.
Investors will execute the Sukuk Subscription Commitment to register investor commitments to subscribe to Sukuk to be issued by Pakistan Domestic Sukuk Company Limited (PDSCL). Under Sukuk’s subscription undertaking, investors may designate PDSCL as their agent for the purchase of the assets on their behalf and for the purposes set out in Sukuk’s issuance undertaking. The primary dealers will also sign the Sukuk subscription commitment on behalf of the selected non-competitive bidders.
PDSCL and SBP’s Banking Services Corporation (SBP-BSC) will sign an agency agreement under which PDSCL will appoint SBP-BSC as the agent responsible for collecting investors’ income, collecting rents and other payments due and distributing them. to investors, and act as a government referral agent and registrar for investors.