The State Bank of Pakistan has invited tenders for the sale of Government of Pakistan Ijara Sukuk (GIS) worth Rs 10 billion. Since long the federal government was considering to issue Ijara Sukuk, which would not only help the government to diversify its debt by reducing borrowing from the central bank but would also arrange the liquidity available with Islamic banks.
Tenders for sale of 3-year GIS have been invited by Director, Domestic Markets & Monetary Management Department (DMMD), State Bank of Pakistan, Karachi. Tender would be received from September 11 to 15, 2008 up to 11:15 am and would be open at 11:30 am on September 15.
Signing of subscription undertaking for the GIS would be made on September 16, 2008 with settlement date of September 26. The SBP has fixed a target of Rs 10 billion for the first auction. However, maximum value of the assets under the present issuance program of Ijara Sukuk is Rs 35.54 billion. The SBP has made it clear that all and any bid can be rejected without assigning any reason.
As per rules, the maturity period of the GIS issue will be for three years from the date of issue and the profit on the Sukuk shall be paid semi-annually on the basis of rental rate announced by the SBP prior to start of each half year.
GOP Ijara Sukuks'' semi-annual profit will be benchmark against the latest weighted average yield of the six-month Market Treasury Bills (MTBs). SBP said that all Islamic banks and commercial banks with Islamic branches will be designated as primary dealers for the purpose of participating in the auction of GOP Ijara Sukuk. However, Islamic branches will not be allowed to separately place bids in the auction.