Govt picks Rs41.7bn through Sukuk auction via PSX

June 28, 2024 (MLN): The Pakistan Stock Exchange (PSX) conducted an auction today for the sale of Government of Pakistan Ijara Sukuk (GIS) bonds, raising Rs41.72 billion against the Rs100bn target set for GIS Variable Rental Rate (VRR) and GIS Fixed Rental Rate (FRR) and GIS FRD.

According to the details made available by the local bourse, the bids received stood at Rs263.64bn, out of which Rs45.48bn were received for GIS FRD, Rs152.94bn for GIS VRR and Rs65.22bn for GIS FRR, respectively.

From the aggregate bids received for the 1-year GIS FRD, a sum of Rs21.33bn was accepted, comprising Rs20.83bn in competitive bids and the remaining Rs501.08m in non-competitive bids.

The cut-off price for the respective bond stood at Rs84.42, which is a rental yield of 18.5%.

For the GIS VRR, a total amount of Rs20.19bn was picked by the government, with Rs5.08bn raised through the 3-year GIS VRR and Rs15.11bn through the sale of 5-year GIS VRR.

Of the total Rs20.19bn, Rs20bn was accepted through competitive bids, while the remaining Rs189.66m comprised non-competitive bids accepted for the respective category of GIS bonds.

Meanwhile, a total amount of Rs197.86m For the GIS FRR, out of which Rs117.86m was raised through the 3-year GIS FRR and Rs80m through the successful auction sale of 5-year GIS FRR.

The 3-year FRR bond was sold at a lower cut-off margin of 30bps, while the 5-year GIS FRR cut-off margin was 31bps lower.

Amount in Rs Million

The breakup of the target for today's auction shows that the aim was to raise Rs20bn through the sale of 1-year GIS FRD, and Rs40bn each for GIS VRR and Rs40bn through GIS FRR.

In a related development, the National Clearing Company of Pakistan Limited (NCCPL) has announced the applicable rates for withholding tax on the Government of Pakistan Ijarah Sukuk (GIS) traded on the Pakistan Stock Exchange (PSX), ranging from 10% to 25%. 

As NCCPL is acting as a paying agent on behalf of Pakistan Domestic Sukuk Company Limited, it will compute and withhold withholding tax on Profit accrued on GDS under requirements prescribed under the Income Tax Ordinance, 2001 at the investor level.

This withholding of tax shall be carried out on disposal of GDS along with CGT computation, the clearing company further said.

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