Government has appointed Dubai Islamic Bank and Standard Chartered Bank Pakistan to manage its first local currency Islamic bond, or sukuk, to be issued this fiscal year, an official said on Friday. The official did not give any details about the issue but banking sources said it would be worth at least 20 billion Pakistani rupees ($309 million).
The deal marks the first sukuk issue by the government in the domestic market, though it raised $600 million through an Islamic bond in the international market in 2005. "These two banks will jointly manage the transaction, which will be completed in the current 2007/08 fiscal year," Ashfaque Hasan Khan, special secretary at the Finance Ministry, told Reuters. Country's fiscal years runs from July to June.
Analysts said despite growing economic woes, the government would find ready buyers for the sukuk given strong growth in the country's Islamic finance market. In calendar 2007, assets of Islamic banks grew by about 74 percent to 205 billion rupees from 118 billion rupees in December 2006 which equates to a 4.2 percent share of Pakistani banks' total assets, State Bank of Pakistan data showed.
Pakistan also plans to issue bonds in the international market in 2007/08 with an option for holders to exchange them for shares of its largest-listed firm, the Oil and Gas Development Co Ltd. That issue would be jointly managed by ABN Amro Barclays and J.P. Morgan.
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