Auction of Rs300 billion Ijara Sukuk to be held in last week of December

And finally State Bank of Pakistan (SBP) has announced auction of Government of Pakistan Ijara Sukuk (GIS-16) having Jinnah International Airport, Karachi as the underlying Asset.

Though, the size of auction was not announced the Government of Pakistan (GoP) is likely to mop up abut Rs 300 billion (around US$3 billion) through GIS-16.

There are twin objectives, top of the agenda being meeting the fiscal deficit and also facilitating Islamic financial institutions, particularly Islamic banks suffering from excessive liquidity problem.

GIS-16 will have a tenor of three years from the date of issue and Sukuk will be issued in multiple of one hundred thousand rupees. Profit on will be paid bi-annually on the basis of rental rate announced by the SBP prior to start of each half year.

Although SBP has not announced any auction date, the industry experts strongly believe that the auction will he held during last week of December 2015. Experts say the issue is already late by almost a month.

According to provisions of the notification of the GoP Ijara Sukuk Rules 2008 Islamic Banking Department of SBP will be responsible for monitoring of proper execution and the legal documentation.