PSX Raises Rs76.3bn for Finance Ministry in 6th GoP Hybrid Sukuk Auction

KARACHI: Investor sentiment in Pakistan's capital market was quite favorable, as indicated by the proceeds of Rs76.286 billion raised from the 6th Auction of Government of Pakistan Hybrid Sukuk held on May 20, 2026. This was achieved through the platform of Pakistan Sukuk Auction and had the sum total of bids of Rs262.197 billion, which is thrice of what was raised in the process.

Bids were thus valued at a total of Rs254.593 billion. The discrepancy between the bids made and the money collected is indicative of the government’s selective acceptance policy where it chooses to accept only the necessary amount at reasonable prices.

Total realised bid values were Rs254.593 billion. The difference between the bids received and the total amount collected can be attributed to the selective absorption approach that was used by the government, which involved accepting only the quantity required at satisfactory prices.

Meezan Bank was one of the Joint Financial Advisors that helped structure and implement the Sukuk program. This involvement further strengthens Meezan Bank’s status as an important player in the Pakistani Islamic Capital Markets environment.

Cut-Off Rates Established in One Year and Ten Year Tranches

In the Sukuk Pakistan auction PSX, two securities were offered for sale at once. The cut-off rate on the one year fixed rate discounted Sukuk was fixed at 12.4880 percent; this represented a decrease of 1.32 basis points.

Variable Rental Rate Sukuk with ten years maturity issued at a rental rate of 11.8569%, which is 0.4884% spread from the reference rate of 11.3685%. The product provides Shariah-compliant and long-term risk-free investment exposure to sovereign credit, which is something sought after by mutual funds, Islamic Banks, and takaful companies while building up their fixed income portfolio.

The decreasing cut-off rate on the one-year tranche is a clear indication of the maturity in the Pakistan Sukuk auction PSX market, which is characterized by sufficient issue volume and an ample number of investors to ensure competitive rates for the government.

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Depth of Islamic Finance is Highlighted

An auction for Pakistani Sukuk with PSX of worth Rs76 billion received bids worth Rs262 billion, thus showing how deeply the market for Islamic securities has become developed in Pakistan. Institutional buyers of securities, such as banks and investment funds that comply with Shariah requirements, have competed to hold the debt issued by the government.

The market players indicated that the high uptake was due to a continued need from market participants for government-sponsored Islamic securities, especially given increased allocation of compliant fixed income by institutional investors. The Government of Pakistan Hybrid Sukuk Program meets the demand for sovereign sukuk issues with predictable pricing and government guarantee.

The project fulfills three objectives at once because it helps increase the pool of investors beyond traditional bondholders, assists liquidity management for Islamic banks through the provision of liquid investments which pass the screening process according to Shariah principles, and offers another means for financing to the Ministry of Finance through the capital market.

Collaborative Structure for Conducting the Issue

The issuance result of Pakistan Sukuk Auction on PSX is a result of collaboration between three entities. Ministry of Finance, State Bank of Pakistan, and Pakistan Stock Exchange joined hands in conducting the auction process.

This tripartite effort has resulted in six successive Hybrid Sukuk auctions, thus establishing a consistent issuance schedule that can be planned in advance by investors while developing a stronger secondary market in sovereign Islamic instruments.