Pakistan successfully issued US$1bn sukuk at 5.5% rate: Dar

ISLAMABAD: Finance Minister Senator Mohammad Ishaq Dar on Thursday expressed satisfaction that Pakistan successfully issued US$ 1 billion sukuk on Wednesday night at a historic low rate of 5.5%.

He claimed that this time Pakistan’s sukuk is better than recent sovereign issuance of bonds by Bahrain and Sri Lanka, the credit ratings of which are higher than Pakistan.

Sukuk is Islamic bonds, which is structured in such a way as to generate returns to investors without involving interest.

The finance minister said Pakistan sukuk was almost five times oversubscribed with orders of around US$ 2.4 billion received as against the initial offering of US$500 million. The orders were placed by over 100 blue chip institutional international investors including investment advisers, asset managers, banks and trusts mutual funds, pension funds and hedge funds for all across the globe. 38% of the orders were placed by investors from Europe, 27% from North America, 27% from Middle East and North Africa, 6% from Asia and 2% from other regions.

He said the process of issuance of sukuk included conduct of roadshows in Dubai, London, Boston and New York by a team comprising finance secretary and governor State Bank of Pakistan.

The team held meetings with over 100 potential institutional investors in these major financial centres in close coordination with the Joint Lead Managers (JLMs) comprising Standard Chartered Bank, Citibank, Deutsche Bank, Dubai Islamic Bank and Noor Bank.

“During the roadshows, the investors showed interest in Pakistan and its economy. The Center for International Development at the prestigious Harvard University has predicted that Pakistan’s GDP will grow by 5.07% over next 10 years. At the same time, the Asian Development Bank, the World Bank / IMF have also recently revised upward their growth forecasts for Pakistan from 4.7% to 5.2% and 5% respectively,” he said.

Ishaq Dar it was important to note that the “Subscription Agreement” with Joint Lead Managers provided that the certificates or interests therein will not be offered, sold or transferred directly or indirectly in Pakistan, to residents of Pakistan, or to, or for the account or benefit of, such persons.

The finance minister also said that the issuance of sukuk will equally reduce the domestic public debt by around Rs 104.5 billion and will, therefore, not result in any increase in the country’s overall public debt.