Pakistan Monday paid back some $1 billion on maturity of five-year international Sukuk.

Pakistan launched $-denominated Islamic bond worth $1 billion of five-year tenor in the international bond market in November 2014, during the tenure of PML-N government. The sovereign bonds were issued at 6.75 percent.

The five-year Sukuk got matured in November 2019 and accordingly, the State Bank of Pakistan (SBP) repaid $1 billion, borrowed to build the foreign exchange reserves.

A SBP official confirmed that a payment of $1 billion was made on Monday against the Islamic bond.

Sources said that the said payment from the SBP's foreign exchange reserves will be reflected in the next weekly forex report. However, as per estimates, with this repayment the SBP's reserves will most likely slip below $7 billion.

Sukuk is a very attractive instrument to attract foreign investment. At the time of launching the Sukuk, the bond fetched bids amounting to $2.3 billion, five times higher than the actual target set by the government.

In addition, Pakistan had also launched five-year Shariah-compliant Sukuk bonds in October 2016 and received offers amounting to $2.4 billion out of which an amount of $1 billion was accepted at 5.5 percent. The Sukuk will mature in 2021.