Karachi: Meezan Bank has announced the successful issuance of Pakistan's first-ever short-term sovereign hybrid Sukuk, marking a significant development in the country's Islamic financial sector. The bank acted as Joint Financial Advisor on the transaction, which featured three-month and six-month tenors, in collaboration with the Ministry of Finance.

According to Meezan Bank Limited, the Sukuk issuance represents Pakistan's first asset-light short-term sovereign hybrid Sukuk, combining Ijarah and Commodity Murabaha structures. This new instrument provides an innovative funding solution for the government while enhancing liquidity management capabilities for the country's Islamic banking industry.

The transaction was developed in partnership with the Ministry of Finance, the State Bank of Pakistan's Islamic Finance Development Department, and a consortium of Islamic financial institutions, including Dubai Islamic Bank Pakistan, BankIslami, and Bank Alfalah Islamic. The Pakistan Stock Exchange, Central Depository Company of Pakistan, and National Clearing Company of Pakistan Limited supported the issuance with necessary infrastructure and settlement processes.

The three-month Sukuk auction attracted bids exceeding PKR 153 billion, significantly surpassing the initial target of PKR 25 billion. The government accepted bids totaling over PKR 80 billion at a weighted average yield of 11.4413%, resulting in an oversubscription rate of approximately 3.2 times. The six-month Sukuk auction also saw interest with bids over PKR 41 billion against a target of PKR 25 billion, and the Ministry of Finance accepted bids worth approximately PKR 24 billion at a yield of 11.5685%.

Additionally, the Ministry of Finance conducted auctions for one-year and 10-year Variable Rental Rate Sukuk, raising around PKR 57.955 billion and PKR 77 billion, respectively, at average yields of 11.7526% and 11.5580%.

Meezan Bank, as Joint Financial Advisor, collaborated closely with the Ministry of Finance to conceptualize, structure, and execute the transaction under the guidance of its Shariah Board. This issuance establishes a new benchmark for sovereign Sukuk innovation in Pakistan, further advancing the country's Islamic finance ecosystem.