Pakistan’s capital market already offers Shariah-compliant financing solutions for both the Government of Pakistan (GOP) and the corporate sector. A robust short-term sukuk market would further enhance the availability of Shariah-compliant financial products, meeting the needs of both issuers and investors more effectively. Since December 2023, the GOP has actively utilized the capital market by issuing sovereign Ijara sukuk instruments.
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To date, the GOP has raised approximately Rs. 713 billion through eleven auctions, offering various types of sovereign Ijara sukuk instruments with maturities of 1, 3, and 5 years via the Pakistan Stock Exchange (PSX). However, the Ijara structure currently does not allow the issuance of short-term tradeable sovereign sukuks with maturities of 3, 6, or 9 months. SECP is exploring alternative Shariah-compliant structures to facilitate the issuance of such short-term tradeable sukuks.
Short-term sukuks are increasingly favored by capital market investors. However, corporate issuers often opt for privately placed, unlisted short-term sukuks, which limits their ability to tap into a broader investor base. The concept paper on short-term corporate sukuk listing suggests ways to make the listing process more attractive, focusing on efficiency, procedural ease, and cost-effectiveness.
Proposed solutions include simplifying the issuance process by offering a condensed version of the Shelf Prospectus, Supplement to the Prospectus, or Abridged Prospectus, enabling electronic publication of the Abridged Prospectus, streamlining regulatory approval processes, lowering regulatory costs, and providing flexibility in appointing intermediaries like CTIs and underwriters.
The development of the sukuk market aligns with SECP’s commitment to supporting the Federal Shariat Court’s ruling to establish a RIBA-free economy. Short-term sukuks are quickly becoming a preferred financing tool both locally and globally.
The concept papers are available for public access on SECP’s website.
