KARACHI: State Bank of Pakistan (SBP) raised Rs6.523 billon through first ever auction of three-year Government of Pakistan Ijara Sukuk (GIS)on Monday.

The banks offered Rs9.523 billion. The range of the margin was between minus 10 to plus 100 basis points (bps) over benchmark rate, which has been linked with 6-month Government Pakistan Treasury Bills. SBP accepted Rs6.523 billion a cut-off margin plus 45 bps over benchmark rate.

As per rules the first Sukuk issue will mature in three years from the date of issue. The profit on the Sukuk shall be paid biannually on the basis of rental rate announced by the State Bank of Pakistan prior to start of each half year.

The biannual profit will be benchmarked against the latest weighted average yield of the 6 month Market Treasury Bills determined one day prior to the start of each 6 month Rental Period (commencing from the issue date of Sukuk) and determined in the same manner at the start of each half year.

In case the last held Market Treasury Bill auction the 6 month tenor is either rejected by the State Bank of Pakistan or there is no participation from the market, State Bank of Pakistan will use the 6 month tenor as given on the Reuters PKRV page (121-180 days) as the above benchmark determined one day prior to the start of each 6 month rental period.

According to SBP the Primary Dealers would be required to place bids as margin over / under the benchmark 6 month Treasury Bill weighted average yield.