KARACHI: The government on Thursday raised Rs48 billion through the auction of five-year fixed and variable rental rates Ijara Sukuk, in a bid to help finance the budget deficit. The government raised Rs27 billion through the auction of Ijara Sukuk (variable), while the amount realised through fixed rental rate Sukuk was Rs21 billion, according to the central bank’s auction result.
The cutoff margin on a variable rental rate Sukuk was minus 20. However, the cutoff margin of the fixed rental rate stood at 8.37 percent.
Earlier this month, the State Bank of Pakistan issued the auction calendar for the issuance of government of Pakistan local currency Sukuk based on Ijara against Jinnah International Terminal for five years.
Pre-auction target was set at Rs75 billion for fixed rental rate Sukuk for July, while similar amounts were set for August and September 2020. The target for the variable rental rate Sukuk fixed at Rs75 billion. Bankers said this is the first time the government has issued two products based on fixed and variable rental rates, simultaneously. “The government has set a sukuk borrowing target of Rs450 billion for the current fiscal year.” “I think it will be positive for the Islamic banks and commercial banks having Islamic operations,” a banker with a leading Islamic bank.”
