KARACHI: Pakistan's finance ministry announced on Thursday that it has raised Rs109.297 billion [$390 million] through its inaugural Hybrid Sukuk, saying the move would pave the way for greater investor participation and boost the Shariah-compliant debt market in the country.
The finance ministry announced it had issued the Hybrid Sukuk in collaboration with the State Bank of Pakistan, the Pakistan Stock Exchange, the SECP regulator and some of the country's leading banks.
It said the Hybrid Sukuk combines an Ijarah Sale & Lease Back (Ijarah SLB) and a Commodity Murabaha transaction, with 55% of the proceeds allocated to Ijarah SLB and 45% to Commodity Murabaha.
"The innovative structure reflects Pakistan's advancing sophistication in Islamic finance and sets a new benchmark for Shariah‑compliant instruments in the region," the finance ministry said.
"The issuance paves the way for greater investor participation and enhanced regional leadership in Islamic financial innovation."
Murabaha is a form of sale where the seller explicitly informs the purchaser of the cost price of acquiring the assets, in addition to the seller's profit or mark-up on that cost price.
Meanwhile, Ijarah or lease is the transfer of the usufruct of an asset to another person in exchange for a rent claimed from that person.
The Hybrid Sukuk was issued through an auction process, the ministry said. It added that the instruments offered for the inaugural issuance were a one-year fixed rate discounted Government of Pakistan Hybrid Sukuk and a 10-year Variable Rental Rate (VRR) Government of Pakistan Hybrid Sukuk.
"The overall issues were oversubscribed by 1.45 times, surpassing the total target amount of Rs200 billion [$718 million], with bids accepted totaling Rs109.297 billion [$390 million] Realized Value," the statement added.
"The cut-off rental rates were set at 11.8000% for 1 Year Discounted and 11.7185% for 10 Year VRR."
Khaliq Uz Zaman, the director of domestic debt at the finance ministry, said introduction of the hybrid structure is a "critical milestone" and "significant step" towards the growth of Shariah-compliant debt markets in Pakistan.
"He added that it will diversify the investor base and deepen the domestic debt market, which will eventually reduce borrowing costs, a key objective of the DMO," the finance ministry said.
