Ijara Sukuk Auction 18-Sep-2023: PKR 95 billion raised

September 19, 2023

In a recent Government of Pakistan Ijara Sukuk auction held by the State Bank of Pakistan (SBP), Rs94.78 billion was raised, falling short of the target of Rs180 billion. This auction featured the sale of 1-year, 3-year, and 5-year GOP Ijara Sukuk (GIS) with both Variable Rental Rate (VRR) and Fixed Rental Rate (FRR) options.

It’s important to highlight that the target for the three months of FY24, spanning from August to October, was set at Rs510 billion for GOPIS (VRR) and Rs330 billion for GOPIS (FRR) auctions.

The SBP reported that the auction attracted bids totaling Rs530.93 billion for the GIS VRR, with a price range spanning from -200 basis points (bps) to 84 bps for the 1-year option, and 100-99.856 for the 3-year and 100-99.73 for the 5-year options.

Out of the total bids received, the SBP accepted a sum of Rs84.088 billion. Specifically, Rs5.788 billion was accepted at a cut-off margin of -200 bps for the 1-year term, Rs2.9 billion was accepted at a cut-off price of 99.856 for the 3-year term, and Rs75.4 billion was accepted at a cut-off price of 99.72 for the 5-year term.

The SBP also conducted an auction for the GIS FRR, which garnered bids amounting to Rs34.73 billion. The fixed rental rate range for this auction varied from 21.75% to 24% for the 1-year term, a price range of 98.8355-95.9 for the 3-year term, and 16.50% to 18.79% for the 5-year term.

From these bids, the SBP accepted Rs10.69 billion at a cut-off rental rate of 22.95% for the 1-year term, Rs16.50% for the 5-year term, and within a price range of 98.4449 for the 3-year term.

The results of this auction reflect the participation of investors in the government’s Sukuk offerings, with varying rates and terms that cater to different investment preferences. While the target was not fully met, the auction still contributed significantly to government financing.