Pakistan Successfully Issues USD 1 Billion Sukuk at a Rate of 7.95%; Highest Sukuk Cost Yet

On the 24th of January 2022, Pakistan’s Ministry of Finance confirmed the issuance of USD 1 billion 7-year tenor asset-backed Islamic Notes (Sukuk Ijara) at a rate of 7.95%. The Sukuk marks Pakistan’s return to the Sukuk market in four years and is suggested to be its highest offered yield on Islamic Notes.

Why it Matters?

Through the procurement of expensive foreign loans, Pakistan has been building its official Foreign Exchange Reserves (FER) for some time. In December 2021, the country secured a USD 3 billion loan from Saudi Arabia from which it had used up almost USD 2 billion. As a result, the gross official FER depleted to USD17 billion as of the 14th of January 2022. The newly raised loan is set to keep the official FER at their level...