Pakistan raises Rs118bn in Sukuk auction

March 26, 2026 (MLN): The Government of Pakistan raised Rs118.05 billion in the 32nd auction of Government of Pakistan Ijarah Sukuk (GIS), showing continued momentum and resilience in the country’s Islamic finance sector despite shifting market conditions.

Meezan Bank, serving as the lead Joint Financial Adviser (JFA), played a key role in structuring and executing the transaction, reinforcing its position in Pakistan’s Islamic capital markets and its commitment to promoting Shariah-compliant financial solutions.

According to the Pakistan Stock Exchange, the auction drew strong investor interest, with total bids amounting to Rs445.49bn.

The significant oversubscription underscores sustained confidence in sovereign Sukuk and highlights the ample liquidity available within the Islamic banking system, according to the press release.

The government adopted a disciplined approach to pricing by accepting only a portion of the bids, aligning with its funding strategy while preserving market stability.

This selective acceptance signals a more mature Sukuk market, where both issuers and investors are increasingly prioritizing efficient pricing and risk management.

The auction outcome is particularly notable as Pakistan advances towards a fully Islamic financial system following the 26th Constitutional Amendment, which calls for the elimination of Riba (interest). In this transition, government borrowing remains a key challenge, with Sukuk instruments expected to play a vital role in enabling large-scale Shariah-compliant financing.

Demand remained robust across select tenors. The one-year Sukuk was accepted at 11.50%, while the five-year fixed rental Sukuk cleared at 11.75%, indicating active participation in core segments.

Additionally, the successful issuance of the 10-year variable rental rate Sukuk points to a growing investor preference for flexible, floating-rate Shariah-compliant instruments.

Market participants observe that Islamic liquidity continues to be strong, with investors adopting a more selective and strategic approach amid evolving interest rate expectations. This shift reflects increasing sophistication in managing duration and portfolio risks.

Overall, Government Ijarah Sukuk remain a key instrument for mobilizing domestic Islamic liquidity, supporting fiscal financing needs, and advancing Pakistan’s broader Islamic finance agenda.

Continued investor interest highlights the sector’s long-term growth potential and its central role in the transition to a fully Shariah-compliant financial system.

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