Sukuk Auction Raises Rs70bn Against Rs250bn Target
The government raised Rs69.955 billion in its latest sukuk auction, about 28 per cent of the Rs250 billion it had aimed to borrow through the Pakistan Stock Exchange.
The auction took place on November 11, with settlement set for November 12. It covered two parts: a fresh issue of short-term sukuk and a reopening of a 10-year sukuk first issued on October 15.
ProPakistani reported the results from the PSX auction data. The figures show strong demand from investors, but the government chose to accept only a small share of the money on offer.
Sukuk auction draws Rs718bn in bids
Investors offered far more than the government took. Bids for the fresh short-term sukuk reached Rs392.374 billion, while bids for the 10-year reopening reached Rs325.94 billion. Together, that is more than Rs718 billion in offers against a target of Rs250 billion.
The government accepted Rs58.887 billion in the fresh issue and Rs11.068 billion in the 10-year reopening. The combined acceptance of Rs69.955 billion is about 28 per cent of the target.
That gap is not a failure of demand. It shows the government turning down bids it found too costly. In a sukuk auction, the state sets the price it will pay, and bids above that price are left out.
The result also fits a market that has been strong in recent weeks. The KSE-100 crossed 180,000 as the PSX rally continued, and the KSE-100 fell 1,492 points by midday on Thursday as investors booked profits after the rally.
Short-term sukuk led by one-year paper
The fresh issue covered three-month, six-month and one-year fixed-rate discounted sukuk, against a target of Rs150 billion.
The one-year paper drew the largest acceptance, at Rs27.795 billion, with a cut-off yield of 12.43 per cent. The three-month paper followed with Rs19.606 billion at 12.139 per cent, while the six-month paper took Rs4.2 billion at 12.2995 per cent.
Competitive bids brought in Rs51.601 billion in face value, worth Rs47.768 billion in cash. Non-competitive bids added Rs7.287 billion, taking the fresh total to Rs58.887 billion and the cash realised to Rs54.626 billion.
Ten-year sukuk reopened at 12.36pc
The second part of the auction reopened the 10-year variable rental rate sukuk. The target was Rs100 billion. The reference rate and the first coupon rate were both set at 12.1179 per cent, based on the latest six-month Treasury bill yield.
Bids reached Rs325.94 billion, with prices from 96.9181 to 99.26. The government accepted only Rs11.068 billion. Of that, Rs10 billion came through competitive bids at a cut-off price of 98.60 and a yield of 12.3624 per cent, a spread of 0.2445 percentage points over the reference rate. Non-competitive bids added Rs1.068 billion at a weighted average price of 99.0528.
The cash realised was Rs10.963 billion before price premiums and Rs11.066 billion after them.
What a sukuk auction means for borrowing
A sukuk is an Islamic bond. Instead of interest, it pays a return linked to an asset or a rental rate, which lets the government borrow under Islamic finance rules. The PSX runs these auctions so banks, funds and other investors can bid in an open process.
The result matters because the government borrows heavily each year to fund its budget. When it accepts less than its target, it must either borrow again soon or find the money elsewhere. That pressure is one reason Pakistan must meet five new conditions to keep its duty-free access to European markets, since export earnings ease the strain on public finances.
It also matters for savers and investors. Yields near 12.1 to 12.4 per cent show what the state is paying to borrow for periods from three months to 10 years. Pakistan rejected two expensive LNG cargo offers in the same week, which points to the same approach: the state is refusing costly deals and waiting for better terms.
The low acceptance also suggests the government is in no rush to pay more than it must. With bids worth nearly three times the target, it could afford to be choosy. The next auction will show whether that stance holds, or whether the state needs to take more of what investors offer.
Oil prices have also slipped to a two-month low, which may ease some of the pressure on the economy in the weeks ahead.
Frequently asked questions
How much did the government raise in the sukuk auction?
The government accepted Rs69.955 billion in face value, about 28 per cent of the Rs250 billion target.
What were the two parts of the auction?
A fresh issue of three-month, six-month and one-year fixed-rate discounted sukuk, and a reopening of a 10-year variable rental rate sukuk first issued on October 15, 2026.
How much did investors bid?
Bids reached Rs392.374 billion for the fresh issue and Rs325.94 billion for the 10-year reopening, more than Rs718 billion in total.
What were the cut-off yields?
The one-year paper yielded 12.43 per cent, the three-month paper 12.139 per cent and the six-month paper 12.2995 per cent. The 10-year reopening yielded 12.3624 per cent.
When was the auction held?
The auction took place on November 11, 2026, through the PSX Auction System, with settlement set for November 12.
