Pakistan sovereign sukuk signals Islamic finance shift

Author: Ashley Lee | Published: 9 Dec 2014

Pakistan’s $1 billion sukuk offering was its first shariah-compliant deal since 2005. It signals that Muslim-majority countries will actively rely on Islamic finance markets for at least part of their fundraising going forward.

The sovereign’s five-year sukuk closely follows its $2 billion sovereign bond sold in April – its first foray into the foreign debt markets after a seven-year hiatus. But investors have anticipated a sukuk due to its strong domestic Islamic finance market.

It demonstrates that the global Islamic finance markets have developed to the point that Muslim-majority countries can rely on it for their annual fundraising plans.

"When raising money internationally, countries such as Pakistan look at raising money both in sukuk and in conventional debt, which shows that sukuk are now a significant part of the overall funding strategy for sovereigns, banks and corporates,"said Farmida Bi of Norton Rose Fulbright.

KEY TAKEAWAYS

Pakistan sold its...