Pakistan US$3 billion Ijara Sukuk auction delayed

The Government of Pakistan (GoP) was scheduled to issue Rs315 billion (equivalent to more than US$3 billion) Ijara Sukuk (GIS-16) by end November this year. The auction was to be held soon after over Rs212 billion Ijara Sukuk maturing on 21st November.
This has led to two serious issues: 1) the GoP still running short of money and 2) Islamic financial institutions sitting tons of non-yielding deposits. It is also feared that banks may also be failing in meeting statutory liquidity requirement (SLR).
It is believed that the underlined asset for the proposed GIS-16 issue was Jinnah International Terminal, Karachi.
One completely fails to understand promptness of Finance Minister in imposing additional taxes of Rs40 billion but completely ignoring GIS-16. If one can recall the Minister has been saying repeatedly that PML-N government was serious in promoting Islamic finance in the country.
The delay in auction is worth probing. The minister is requested to kindly find out what the debt management department is doing? 

Government of Pakistan Issuing Ijara Sukuk

In accordance with provisions of the notification of the GoP Ijara Sukuk Rules, 2008, another GoP Ijara Sukuk will be issued. Detailed transaction structure can be found at http://www.sbp.org.pk/dmmd/2014/C10-Annex- C.pdf

As per transaction mechanism, profit on the GOP Ijara Sukuk will be based on the followings: Rental rate benchmarked against the latest weighted average yield of the 6 month Market Treasury Bills or 6 month PKRV (as per FSCD circular 13 dated September 06, 2008). The rental rate as mentioned may be adjusted based on the difference between estimated supplementary rental and actual maintenance expenses of the underlying asset as explained in transaction structure.

For this particular issue of GIS (M-3), the total auction participation of a single 9Primary Dealer (PD) will be capped at whichever is the lower of the following: a) PKR 25 billion or b) 20% of Total Demand & Time Liabilities-Islamic (excluding FE-25 deposits) of the respective PD Islamic bank / Islamic window of that particular PD.

For this purpose, Total Demand & Time Liabilities – Islamic as of 28th March, 2014 will be used as reported to the State Bank of Pakistan.

In case any PD breaches the aforesaid limit, SBP reserves the right to cancel all or some of the bids of the concerned bank.

All Islamic banks and commercial banks with Islamic Branches are designated as PD for participating in the auction of GOP Ijara Sukuk.

All designated PD for the GOP Ijara Sukuk are advised to ensure meticulous compliance with the above instructions.

All other instructions on the subject shall, however, remain unchanged.