Qudsia Bano

The first primary market auction of one-year Ijarah Sukuk at the Pakistan Stock Exchange (PSX) has achieved a resounding success, setting a historic milestone in the country's economic history, reports WealthPK. The auction not only demonstrates the efficiency of the PSX's state-of-the-art automated system but also marks the first-ever issuance of a Government Debt Security (GDS) through this advanced platform. Against a targeted Rs30 billion Sukuk, the accepted bids soared to Rs36.068 billion, reflecting strong investor confidence. The total bids received amounted to an impressive Rs481.307 billion, showcasing a robust demand for the government's Ijarah Sukuk. A notable feature of the auction was the participation of 172 investors, with 132 emerging as successful bidders, thereby creating a diverse investor base for the Government of Pakistan (GoP). The subscription amount reached Rs30.191 billion, with a cut-off rental rate of 19.5199% and a price of Rs83.7055. Dr. Shamshad Akhtar, Caretaker Federal Minister for Finance, Revenue & Economic Affairs, expressed pride in this achievement, stating, "We are truly proud of this remarkable achievement, which had been on the back burner for a long time."

She highlighted the significance of implementing Government Debt Securities issues through the Stock Exchange, emphasizing the substantial benefits for the GOP, including a diversified investor base and new investment opportunities. The accepted bids totaled Rs36.068 billion, while all the bids received totaled Rs481.307 billion, falling short of the Rs30 billion Sukuk target. Up to 172 investors participated in the bidding procedure, of which 132 were successful. This gave the government access to a diverse pool of investors. The price of Rs83.7055 and the cut-off rental rate of 19.5199% resulted in a total subscription amount of Rs30.191 billion. Hamza Anwar, Equity Manager at Zahid Latif Khan Securities, lauded the recent success of the Government of Pakistan's Ijarah Sukuk auction as a pivotal moment for the nation's financial landscape. As an expert with a keen eye on equity markets, Anwar viewed this achievement as a symbol of evolving dynamics of Pakistan's capital markets and their potential to attract a diverse range of investors. Expressing his perspective on the historic auction, Anwar emphasized the significance of the PSX's automated and efficient system, which played a crucial role in the seamless execution of government debt issuance.

He noted that the oversubscription of Sukuk by 16 times indicates a robust demand from investors, reflecting a positive sentiment toward government securities. "The successful auction of the government's Ijarah Sukuk is a clear indication of the market's confidence in Pakistan's economic prospects," said Anwar. "The participation of 172 investors and the diverse pool of successful bidders underscore the attractiveness of government debt securities as a viable investment option." Looking ahead, Anwar saw this achievement as a catalyst for further developments in Pakistan's capital markets. "The launch of Government Debt Securities at the PSX is a stepping stone for a broader market development. It is now crucial for the market participants, including brokers, insurance companies, and asset managers, to capitalize on this momentum and actively market these instruments to attract new investors," he added.

Credit: INP-WealthPk