KARACHI: Pakistan has successfully completed its first-ever Hybrid Sukuk issuance, raising over Rs109 billion through an oversubscribed auction, marking a major milestone in the country’s Islamic finance sector. The issuance was carried out by the Debt Management Office (DMO) under the Ministry of Finance in collaboration with the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan, along with key financial institutions and capital market entities. This innovative Hybrid Sukuk combines two Shariah-compliant structures — Ijarah (Sale & Lease Back) and Commodity Murabaha — with 55 percent of the proceeds allocated to Ijarah and 45 percent to Murabaha, reflecting the growing sophistication of Pakistan’s Islamic finance market and setting a new benchmark in the region.
The auction was facilitated by major financial infrastructure institutions, including the Pakistan Stock Exchange, the National Clearing Company of Pakistan Limited, and the Central Depository Company. Two instruments were offered: a one-year fixed-rate discounted Sukuk and a 10-year Variable Rental Rate (VRR) Sukuk. The auction witnessed strong investor participation, with total bids exceeding Rs200 billion — about 1.45 times the target — while the government accepted bids worth Rs109.297 billion. The cut-off rental rates were set at 11.80 percent for the one-year Sukuk and 11.7185 percent for the 10-year VRR instrument.
Khaliq Uz Zaman, Director of Domestic Debt at the Ministry of Finance, described the issuance as a critical milestone for Pakistan’s debt market, noting that the hybrid structure would help diversify the investor base and deepen the domestic debt market. He added that the initiative is expected to contribute to lowering borrowing costs over time, in line with the DMO’s broader objective of strengthening fiscal sustainability. Market participants believe the successful launch will enhance investor confidence and attract greater participation in Shariah-compliant instruments, positioning Pakistan as a growing player in regional Islamic finance, while the Pakistan Stock Exchange management also congratulated stakeholders on the successful execution of the inaugural issuance.