The Prime Minister of Pakistan Imran Khan said Wednesday a 70% oversubscription in Sukuk at the Pakistan Stock Exchange (PSX) indicated “strong market confidence”.
“Landmark financial innovation with Rs 200 bn Sukuk issued through competitive book building at PSX. Oversubscribed by 170%, reflecting a strong market confidence in our [government’s] policies,” PM Imran wrote on Twitter.
“As a result [government] saved Rs18 billion – savings that can now be used for welfare of the people,” he added.
Oversubscription in investment terms shows a situation wherein there are way more buyers for the shares — or Sukuk bonds — than on offer.
A day prior, The News had reported that the Rs200-billion Pakistan Energy Sukuk-II were in strong demand at the Pakistan Stock Exchange on Monday and were oversubscribed by 62.5% the first day, indicating that the government would discover a low interest rate.
Oversubscription was expected — as witnessed today — since the government-guaranteed, Shariah-compliant securities garnered major interest from the investors. At the time, market sources had revealed that the debt instrument was over-subscribed by Rs125 billion.
At 100% Statutory Liquidity Requirement (SLR) eligibility, the Sukuk bonds were the first-ever debt issuance that were put on offer through the PSX. With a 10-year maturity, they offer semi-annual profits.
This is the second issue of the energy Sukuk bonds by the Power Holding Limited (PHL), a public sector entity owned by the energy ministry. In October last year, PSX had listed Energy Sukuk-I worth Rs200 billion.
The PHL had issued these Sukuk bonds in a bid to address the liquidity constraints being faced by Pakistan’s power sector. They were put on offer through the PSX to ensure transparency and competitive bidding.