Which Asian country issued Sukuk bonds to raise $1 billion in 2022?
Turkey
Pakistan
Sri Lanka
Myanmar
Answer: Pakistan
Pakistan re-entered the Islamic-denominated Sukuk Bond market on Monday after a four-year hiatus, offering a 7.95 percent yield versus an initial price target range of 8.25 to 8.37 percent.
It is most likely the highest yield ever provided for an asset-backed Islamic Sukuk Bond in Pakistan. When it was in opposition, the then-ruling PTI had long opposed the Sukuk Bond, claiming that the country’s assets were mortgaged to get loans. It was opposed by several cabinet members during the PTI’s 41-month reign whenever the proposal for launching the Sukuk Bond was presented to them.
Pakistan issued the Sukuk Bond in 2014-15 at a fixed rate of 6.75 percent in order to raise $1 billion. Islamabad issued a $1 billion Sukuk Bond for five years in October 2016 at a rate of 5.5 percent, and then again in December 2017 at a rate of 5.625 percent.
Despite the government’s assurances that the country’s economy has steadied, the highest-ever rate is presently being offered on Sukuk Bonds. Many independent economists claimed that issuing the Sukuk Bond before the IMF program’s renewal makes no sense.
If the IMF had been involved, the price could have been lower. Pakistan has done all possible to regain access to the IMF, but it makes no sense to boost the cost of long-term debt.
The government provided an asset-backed guarantee of Motorway (M-2) segments in order to launch the $1 billion Sukuk Bond. It has set up a Special Purpose Vehicle (SPV) to launch the Sukuk Bond.
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