The Government of Pakistan has increased the target size of its 10-year Variable Rental Rate (VRR) Hybrid Sukuk auction to Rs200 billion, four times higher than the previously announced target of Rs50 billion. The revised target applies to the reopening of the sukuk scheduled for June 10, 2026, according to a notice issued by the Pakistan Stock Exchange (PSX) on the recommendation of the Debt Management Office (DMO).
The PSX stated that only the auction target and the maximum per-investor limit for non-competitive bids have been revised, while all other terms and conditions of the issuance remain unchanged. The move reflects the government’s growing emphasis on Shariah-compliant financing instruments to support its domestic borrowing requirements.
The 10-year Hybrid Sukuk was originally issued on April 16, 2026, and is set to mature on April 16, 2036. The instrument is structured under a hybrid Islamic financing model that combines Ijarah (sale-and-lease-back) and Commodity Murabaha transactions. Under the arrangement, 55% of the proceeds are allocated to the Ijarah component, while the remaining 45% are directed toward Commodity Murabaha financing.
According to the term sheet, the sukuk offers a floating return linked to either the six-month Treasury Bill weighted average yield or the six-month Pakistan Revaluation Rate (PKRV). The benchmark rate for the first rental period has been fixed at 11.3685%, while investors will receive an additional spread of 35 basis points above the benchmark. Profit payments will be distributed on a semi-annual basis, with the rental rate reset every six months.
In a separate announcement, the PSX also released a revised auction calendar for Government of Pakistan Hybrid Sukuk (GHS) and Government of Pakistan Ijarah Sukuk (GIS) issuances covering the June-August 2026 period. The updated schedule outlines a total fundraising target of Rs2.05 trillion through sovereign sukuk auctions.
The calendar shows that Rs1.6 trillion will be raised through discounted and variable-rate Hybrid Sukuk issuances across six auctions, while an additional Rs450 billion will be targeted through fixed-rate Hybrid Sukuk and fixed-rate zero-coupon Ijarah Sukuk offerings. Two VRR auctions are scheduled in June, each carrying a target size of Rs350 billion, while two auctions in July will target Rs250 billion each. Two additional auctions in August will carry targets of Rs200 billion each.
Meanwhile, fixed-rate GHS and GIS auctions are scheduled for June 17, July 2, and August 4, with each auction targeting Rs150 billion. Market analysts believe the government’s decision to increase the size of the reopening auction highlights its growing reliance on longer-term Islamic financing instruments to diversify funding sources and deepen Pakistan’s sovereign sukuk market.
The sukuk is listed and tradable on the Pakistan Stock Exchange and qualifies for 100% Statutory Liquidity Requirement (SLR) eligibility for qualifying investors. Investment opportunities are available to individuals, institutions, Roshan Digital Account holders, overseas Pakistanis, and foreign investors under the amended Government of Pakistan Sukuk Rules.