By Staff Reporter
KARACHI: The State Bank of Pakistan (SBP) on Monday unveiled a transaction structure for the issuance of domestic Sukuk or Islamic bonds, which will be issued against new five identified underlying assets.
The government has planned to raise Rs1 trillion from Islamic banks during the current fiscal year and the new structure is to facilitate the issuance of domestic Ijarah Sukuk programme on identified assets.
“The documentation for this structure will include a Sukuk Subscription Undertaking, Sukuk Issuance Undertaking, Purchase Agreement, Title Agency Agreement, Agency Agreement, Ijarah Agreement, Service Agency Agreement, Purchase Undertaking, Cost Undertaking and Rules,” the SBP said in a circular.
The highway lands under the National Highway Authority could be used as assets for the fresh issuance as well as the reopening of Ijarah Sukuk. Makran Coastal Highway, Ormara, Makran Coastal Highway, Gwadar and Jiwani, Grand Trunk Road, Peshawar, and Nowshera, have been identified as potential assets for the new issues.
In addition, Indus Highway Project, Peshawar, Kohat, Lachi, Banda, Daud Shah, Karak, Domair, Bannu, Norang, Lakki Marwat, D.I Khan and Indus Highway Project, Peshawar, Kohat, Karak, Takht Nasrali, Naurang, Bannu, and Parova are the assets against which the planned Sukuk would be issued.
Under the Sukuk transaction structure rules, the central will conduct an auction through which investors will be identified. Non-competitive bidders may also submit their bids. For this purpose, non-competitive bidders will authorise any of the primary bidders through the signing of an authorisation form.
“The Investors will execute the Sukuk Subscription Undertaking to record the commitments of the Investors to subscribe to the Sukuk to be issued by Pakistan Domestic Sukuk Company Limited,” the SBP said.
“Under the Sukuk Subscription Undertaking, the Investors may appoint PDSCL as their agent for purchase of the Assets on their behalf and the purposes set out in Sukuk Issuance Undertaking.”
The primary dealers will also sign the Sukuk subscription undertaking on behalf of successful non-competitive bidders.
“In the Sukuk subscription agreement, the primary dealers (acting on behalf of the Sukuk Investors) would also give their explicit consent to the investment agent to add/merge/comingle new assets and/or additional share in the existing asset(s) in the future, subsequent to the reopening of Sukuk, which may dilute/change their ownership share in their assets and create their share in the new/additional assets,” the central bank added.
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