The Government of Pakistan raised Rs75.314 billion through its latest Hybrid Sukuk auction, falling short of the combined Rs100 billion target.
The auction took place through the Pakistan Stock Exchange (PSX) Auction System and covered Government of Pakistan Hybrid Sukuk (GHS) and Ijarah Sukuk (GIS).
The government secured the entire amount through three-year and five-year Fixed Rental Rate Hybrid Sukuk. However, it rejected all bids for the 10-year Fixed Rate Zero Coupon Ijarah Sukuk.
Three-Year Sukuk Attracts Strongest Demand
The government invited bids for three-year and five-year Hybrid Sukuk against a combined target of Rs75 billion. The three-year instrument carried a coupon rate of 12%, while the five-year Sukuk offered a 12.25% coupon rate.
Investors submitted bids worth Rs233.097 billion across both tenors. The three-year Sukuk received Rs128.518 billion in bids, while the five-year instrument attracted Rs104.580 billion.
The government accepted Rs75.113 billion through competitive bids.
The three-year Sukuk secured the largest share at Rs58.363 billion. Its cut-off yield stood at 12.74%.
Meanwhile, the government accepted Rs16.750 billion through the five-year Sukuk at a cut-off yield of 12.83%.
Non-Competitive Bids Add Rs202 Million
The auction also included Rs202 million in accepted non-competitive bids. Investors placed Rs131 million in the three-year tenor and Rs71 million in the five-year instrument.
Following both competitive and non-competitive allocations, total acceptance reached Rs75.314 billion.
The three-year Sukuk accounted for Rs58.494 billion of the total. The five-year instrument contributed another Rs16.821 billion.
10-Year Ijarah Sukuk Gets Little Interest
The 10-year Fixed Rate Zero Coupon Government Ijarah Sukuk attracted almost no investor interest. The instrument had a pre-auction target of Rs25 billion and will mature on October 8, 2036.
However, the auction received bids worth only Rs0.01 million at a price of 29.4588. The government rejected the bids and raised no funds through the instrument.
The weak participation stood in sharp contrast to the strong demand for the shorter Hybrid Sukuk tenors.
Government Falls Short of Combined Target
Overall, the government raised Rs75.314 billion against its combined Rs100 billion target.
The result reflects strong investor demand for three-year and five-year Hybrid Sukuk. However, the lack of interest in the 10-year zero-coupon Ijarah instrument limited the total amount raised.
The PSX had revised the auction targets earlier this week. Under the revised structure, the three-year Hybrid Sukuk carried a Rs25 billion target, while the five-year instrument retained a Rs50 billion target. The 10-year Ijarah Sukuk had a Rs25 billion target.
The latest auction results show that investors remained more interested in shorter-duration government Islamic securities than the 10-year zero-coupon instrument.
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