ISLAMABAD - Pakistan has successfully issued one billion dollars Sukuk bonds in international market at interest rate of 5.5 percent, which Finance Minister Ishaq Dar termed the lowest ever rate in country's history.

Pakistan has received an overwhelming response from the international buyers due to economic turnaround of the country, finance minister said in a press conference.

He further said Pakistan Sukuk was almost five times oversubscribed with orders of approximately $2.4 billion received as against the initial offering of $500 million.

Dar said that over 100 blue chip institutional international investors including investment advisers, asset managers, banks and trusts mutual funds, pension funds and hedge funds from all across the globe placed the orders. 

The breakup of investors is as: 38 percent from the European Union, 27 percent from North America, 27 percent from Middle East, six percent from Asia and 2 percent from other regions, he added.

He further informed that Pakistan has set an indicative interest rate at 5.75 percent for the selling of the sukuk bonds. But, later, the government decided to float one billion dollars bonds at rate of 5.5 percent, he added. The interest is low, which is better than recent sovereign issuance of bonds by both Bahrain and Sri Lanka, the credit ratings of which are higher than Pakistan.

The government has floated the bonds to repay the debt borrowed by Pervez Musharraf government in 2007 at 6.75 percent interest rate.

The PML-N government is continuously issuing bonds from last three and a half years. It has issued Eurobonds and Sukuk worth over $4.5 billion so far.

Dar hoped that Pakistan's economic growth rate would go beyond 5 percent in ongoing financial year as predicted by the international institutions. He said that Harvard has forecast average 5.4 percent GDP growth for Pakistan for 10 years, while the Asian Development Bank, the World Bank / IMF have also recently revised upward their growth forecasts for Pakistan from 4.7% to 5.2% and 5% respectively for current fiscal year.

"Pakistan has successfully completed the International Monetary Fund (IMF) programme on September 30," he said.

He rejected the news that Pakistan has to return $1.5 billion to Saudi Arabia. He said that government would meet the defence requirements of the country at all costs by making country's defence more strong.

Sharing the details of issuing Sukuk bonds, Dar said process of issuance of sukuk included conduct of roadshows in Dubai, London, Boston and New York by a team comprising Finance Secretary and Governor State Bank of Pakistan.  The team held meetings with over 100 potential institutional investors in these major financial centres in close coordination with the Joint Lead Managers (JLMs) comprising Standard Chartered Bank, Citibank, Deutsche Bank, Dubai Islamic Bank and Noor Bank. During the roadshows, the investors showed unprecedented interest in Pakistan and its economy. They were particularly appreciative of the remarkable turnaround in Pakistan's economy as a result of comprehensive and far-reaching reforms undertaken by the government.

Finance minister said that as many as 124 leading institutions took part in book building process and Joint Lead Managers comprising Standard Chartered Bank, Citibank, Deutsche Bank, Dubai Islamic Bank and Noor Bank finalised the 90 institutions to take part in bidding process of the Sukuk Bond.

The roadshows ended on 4th October 2016 and book building process closed on 5th October 2016 after which allocation and pricing exercise took place which was participated in by Finance Minister Senator Mohammad Ishaq Dar through a series of video conferences and conference calls. These video and audio conferences were participated in by the officials of Ministry of Finance, representatives of the Joint Lead Managers as well as the Syndicate based in London.

It is important to note that the "Subscription Agreement" with Joint Lead Managers provides that the certificates or interests therein will not be offered, sold or transferred directly or indirectly in Pakistan, to residents of Pakistan, or to, or for the account or benefit of, such persons.

Finance Minister stated that the issuance of sukuk will equally reduce the domestic public debt by around Rs 104.5 billion and will, therefore, not result in any increase in the country's overall public debt.