Hybrid Sukuk: Pakistan Launches First Short-Term Sovereign Sukuk as Meezan Bank Advises Landmark Issue

KARACHI, July 23, 2026: Pakistan has launched its first-ever short-term sovereign hybrid Sukuk, with Meezan Bank serving as Joint Financial Advisor on the landmark issuance introduced by the Ministry of Finance.

The Hybrid Sukuk issuance marks a major step in the evolution of Pakistan’s Islamic financial sector by introducing the country’s first asset-light short-term sovereign Sukuk with three-month and six-month tenors. The innovative structure combines Ijarah and Commodity Murabaha contracts, offering the government a new Shariah-compliant funding solution while improving liquidity management across the Islamic banking industry.

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Meezan Bank worked closely with the Ministry of Finance under the guidance of its Shariah Board to design, structure and execute the transaction. The initiative also involved the State Bank of Pakistan’s Islamic Finance Development Department and a consortium of Islamic banks, including Dubai Islamic Bank Pakistan, BankIslami and Bank Alfalah Islamic.

The issuance received strong institutional support from the Pakistan Stock Exchange (PSX), the Central Depository Company of Pakistan (CDC) and the National Clearing Company of Pakistan Limited (NCCPL), which provided the market infrastructure required for settlement and execution.

Investor demand significantly exceeded expectations during the three-month Sukuk auction. The government received bids worth more than PKR 153 billion against a target of PKR 25 billion and accepted bids exceeding PKR 80 billion at a weighted average yield of 11.4413%. The accepted amount represented an oversubscription of approximately 3.2 times.

The six-month Sukuk auction also attracted solid interest, drawing bids of more than PKR 41 billion against the same PKR 25 billion target. The Ministry of Finance accepted bids worth approximately PKR 24 billion at a weighted average yield of 11.5685%, remaining within its planned issuance size.

Alongside the new short-term Sukuk, the Ministry of Finance also conducted regular auctions for one-year and 10-year Variable Rental Rate Sukuk, raising approximately PKR 57.955 billion and PKR 77 billion, respectively. The weighted average yields stood at 11.7526% for the one-year instrument and 11.5580% for the 10-year Sukuk.

The successful issuance establishes a new benchmark for sovereign Sukuk innovation in Pakistan. It also strengthens the government’s Islamic capital market framework while expanding Shariah-compliant investment opportunities for financial institutions.