Govt raises Rs209bn through Ijarah Sukuk auction

September 30, 2025 (MLN): The Government of Pakistan successfully raised Rs 208.98 billion through a primary market auction of Ijarah Sukuk (GIS), via the Pakistan Stock Exchange auction system.

The substantial fundraising exercise saw bids worth Rs932.58bn, nearly 4.7 times the target amount of Rs200bn, demonstrating robust demand for government-backed Islamic bonds across multiple maturities.

Strong Oversubscription in Short-Term Paper

The 1-year discounted Ijarah Sukuk dominated the auction, attracting bids of Rs229.13bn and raising Rs75.17bn against a target of Rs50bn.

The government accepted competitive bids worth Rs 73.48 billion at a cut-off rental rate of 10.43%, with the cut-off price set at 90.58.

Medium-Term Fixed Rate Sukuk See Healthy Demand

The 3-year GIS Fixed Rental Rate (FRR) received bids totaling Rs71.56bn, with the government raising Rs61.79bn against a Rs25bn target.

Competitive bids of Rs61.56bn were accepted at a cut-off rate of 10.75% and a price of 100.00.

The 5-year GIS FRR attracted Rs112.75bn in bids, raising Rs51.56bn against a Rs25bn target. The cut-off rental rate was set at 11.14% with competitive acceptances of Rs51.25bn at par value.

Zero-Coupon Bids Rejected

All bids for the 10-year GIS Zero Coupon instrument, totalling Rs232.3bn against a Rs25bn target, were rejected by the government.

Variable Rate Instruments Show Mixed Results

The 5-year Variable Rental Rate (VRR) sukuk saw bids worth Rs107.36bn rejected entirely against a Rs25bn target.

However, the 10-year GIS VRR attracted Rs179.48bn in bids and raised Rs20.46bn against a Rs50bn target, with competitive bids of Rs20.25bn accepted at a cut-off margin of 100 basis points.

Detailed Auction Results

Instrument
Bids Received (Rs bn)
Competitive (Rs bn)
Non-Competitive (Rs bn)
Total Raised (Rs bn)
Target (Rs bn)
Cut-off Rate/Margin
Cut-off Price
1-Year Discounted
229.13
73.48
1.69
75.17
50.00
10.43%
90.58
3-Year FRR
71.56
61.56
0.23
61.79
25.00
10.75%
100.00
5-Year FRR
112.75
51.25
0.31
51.56
25.00
11.14%
100.00
10-Year Zero Coupon
232.30
-
-
Bids Rejected
25.00
Bids Rejected
-
5-Year VRR
107.36
-
-
Bids Rejected
25.00
Bids Rejected
-
10-Year VRR
179.48
20.25
0.21
20.46
50.00
100 bps
100.00
Total
932.58
206.54
2.44
208.98
200.00
-
-

Source: PSX

The auction's success, with total bids exceeding Rs932bn, demonstrates exceptional investor confidence in Pakistan's Islamic finance instruments.

The government strategically accepted Rs208.98bn, comprising Rs206.54bn in competitive bids and Rs2.44bn in non-competitive bids, slightly above the Rs 200 billion target.

The rejection of bids for both the 10-year zero-coupon and 5-year VRR instruments suggests the government found the pricing unacceptable, maintaining fiscal discipline despite strong demand.

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