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Pakistan gained $2.5 billion from selling two U.S. dollar-denominated sukuk and Eurobond issues in New York, according to senior official. These issues had attracted total offers of $8 billion in the process.
Pakistani authorities however decided to only sell $2.5 billion at, according to officials „affordable rates“. In an interview an delegate said: "We have raised $1 billion through five-year sukuk at rate of 5.625% and $1.5 billion from a 10-year Eurobond maturity at a rate of 6.875%," Federal Secretary Finance Shahid Mehmood said.
These two deals have been the largest in the country's history so far. The 10-year bond was the cheapest bond ever launched by Pakistan. Last year the country borrowed $1 billion in the global sukuk market at 5.5%. It also floated a 10-year, $500 million Eurobond at 8.25% in 2015.
The government appointed a consortium of Standard Chartered Bank, Industrial and Commercial Bank of China, Citibank, Deutsche Bank, Dubai Islamic Bank and Noor Bank as the lead managers for conducting sukuk transactions. Noor Bank thereby will manage the Middle East sukuk bond.

The Shariah Advisory Board (SAB) of the Securities and Exchange Commission of Pakistan (SECP) has reviewed the proposal of Shariah-compliant trading counter. The main feature of the proposal is to convert the T+2 settlement into T+0 settlement mechanism in the Shariah-compliant securities listed on the Pakistan Stock Exchange (PSX). The Shariah Advisory Board has granted approval of the proposed trading counter. The board also reviewed and granted approval of three AAOIFI standards: Shariah Standard No 17 - Investment Sukuk, Shariah Standard No 18- Possession and Shariah Standard No 23 - Agency and the Act of an un-commissioned agent.

Standard and Poor’s (S&P) assigned a preliminary ‘B’ long-term rating to the proposed dollar-denominated sukuk issuance by Pakistan. A similar rating was assigned to the proposed benchmark sized US dollar-denominated senior unsecured sukuk, which will be issued by The Third Pakistan International Sukuk Company. The government may raise the amount with pricing in the range of 5.5 to 7% for 5 to 10 years. This is expected to provide the much needed support to Pakistan’s foreign exchange reserves. In October last year, Pakistan raised one billion dollars through issuance of 5-year sukuk at a historic low rate of 5.5%. The country floated a 10-year Eurobond of $500 million at 8.25% in 2015. These bonds had S&P rating of B-.

Pakistan is all set to generate up to $3 billion by issuing euro and sukuk bonds in the international debt market. Road shows for introducing bonds will soon start in the United Arab Emirates (UAE), Europe and United States. The government’s plans to raise loans from the international market by issuing bonds would support the foreign exchange reserves, which are under pressure due to widening trade deficit. The deficit surged by 100% to $5.013 billion in the first four months of the current fiscal year as compared to $2.259 billion of a year ago. Both Sukuk and Eurobond are expected to be offered with tenures ranging from 5 to 30 years. The S&P earlier has assigned preliminary B rating to Pakistan’s proposed dollar bond issue.

#Pakistan's National Savings is expected to launch its first Islamic savings product by the start of 2018. According to Zafar Masud, director general of National Savings, the proposed product would begin with one year maturity and allow investors to earn monthly profit. The plan is to issue this product from the National Savings centres. Investors can invest a minimum of Rs10,000 with no maximum investment limit. National Savings manages a portfolio which is around 30% of Pakistan’s total banking deposits and serves more than seven million accounts. Experts see prospects of higher demand for Islamic finance to tap domestic savings. It is expected to increase competition among conventional and Islamic lenders to offer best returns to the savers.

Pakistan has allowed immediate borrowing of up to $3bn from international debt markets by floating three sovereign bonds. The country is going to float the bonds in the largest transaction to take pressure off the central bank’s foreign exchange reserves that are depleting at a rapid pace. Earlier, the government borrowed $2bn in 2014 through similar capital market transactions. A consortium of banks have initially indicated that five-year sukuk, ten-year Eurobond and another 30-year Eurobond with combined proceeds of around $2bn to $3bn can be floated. The cabinet waived a dozen income taxes to make the float attractive for foreign investors. Road shows are expected to be held in the UK, US, Dubai, Singapore and Hong Kong. Standard Chartered Bank, Industrial and Commercial Bank of China, Citibank and Deutsche Bank were appointed for the Eurobond issue. For the proposed Sukuk, the Fourth Pakistan International Sukuk Company is being incorporated by the Finance Division.

Pakistan has picked arrangers for a potential $2bn debt sale planned for later this year. The sale would come as Pakistan’s finances are starting to show strain. The nation’s foreign-exchange reserves have fallen 15% to $19.8b this year as its traditional exports dwindle and imports rise. The World Bank estimates that $17b of external financing is needed in the next financial year for Pakistan to bridge its rising debt payments and current account deficit. The deficit is expected to widen to 5.7% of gross domestic product, from a deficit of 4.4% in 2016. The country is planning to raise $1b from a Sukuk offering, and has mandated Citigroup, Standard Chartered, Deutsche Bank, Dubai Islamic Bank and Noor Bank to manage the sale. Citigroup, Standard Chartered, Deutsche Bank and Industrial & Commercial Bank of China were chosen for a potential conventional bond offering of an equal amount.

Dubai Islamic Bank (DIB) and Shahnawaz have entered into a strategic alliance agreement. Shahnawaz is the authorized general distributor of Mercedes-Benz in Pakistan. This initiative will help in establishing Dubai Islamic Bank Pakistan as the preferred financial services partner for Mercedes-Benz in the country. The signing ceremony was held in Karachi in the presence of M Naeem, CEO of Shahnawaz, Naseem Shaikh, General Manager of Shahnawaz and Junaid Ahmed, CEO of Dubai Islamic Bank Pakistan. Junaid Ahmed said this alliance enables the bank's high net worth clientele to achieve their dream of driving their own state-of-the-art Mercedes.

While still quite new in Pakistan, Islamic banking is moving ahead in all segments of their operations. The network of Islamic banking institutions (IBIs) has expanded. Now it consists of 21 IBIs, five full-fledged Islamic banks and 16 conventional banks having stand-alone Islamic banking branches. IBIs have expanded their branch network to 2,320 branches. The number of Islamic banking windows, operated by conventional banks, is now at 1,255. Islamic banks' assets in overall banking assets were 11.6% at the end of June. Their asset base increased by Rs150 billion, or 8%, during the quarter to stand at Rs2,035 billion. The market share of IBIs in the overall banking industry was recorded at 11.6% and deposits 13.7% at end-June 2017.

#Pakistan's National Accountability Bureau (NAB) initiated an inquiry into the alleged misuse of authority by SBP officials at the amalgamation of KASB Bank into BankIslami. According to the State Bank of Pakistan (SBP), a smear campaign was run in the media against them. SBP added that the onesided views presented in the media led to misjudgment about the authority of SBP as a guardian of the financial sector. All stakeholders of the defunct KASB Bank were well aware of the poor financial conditions of the bank. The State Bank gave ample time to the sponsors of KASB Bank to inject further capital into the bank. Besides capital shortfall, the bank and its sponsors engaged in fraudulent practices and were siphoning off more than Rs 3 billion from the bank. SBP stated that none of its officials misused authority nor were involved in any kind of corrupt practices.

To enhance the credibility of Islamic financial services sector, the Securities and Exchange Commission of Pakistan (SECP) introduced a draft of Sharia Advisors Regulations 2017. The new regulations are expected to professionalise Shariah advisory services. Companies would only be able to engage the advisors who would be on the SECP’s panel of Shariah advisors. To join this panel, advisors need to meet proper criteria and abide by a code of conduct that emphasises independence and objectivity. The draft of Shariah Advisors Regulations 2017 is available on the SECP’s website and is now open to the public for consultation.

#Pakistan's Silk Bank plans to expand its Islamic banking business amid growing demand for Shariah-compliant financial products in the country. The State Bank of Pakistan has given approval to the bank for opening of 20 Islamic and 15 conventional branches this year. Silk Bank CEO Shaukat Tarin said the bank was going to reduce the size of corporate banking, but increase consumer and SME segments. The bank’s consumer banking portfolio continued to grow, while its non-performing loans fell by Rs10 billion in January-June 2017. The bank also made its commitment to revive the mortgage business in the current low interest rate environment. Shuja Alvi, head of investment at Silk Bank, said the bank continued to make heavy investments. Since acquisition, the sponsors have invested Rs430 billion in the bank through multiple funding.

The State Bank of #Pakistan (SBP) issued the Islamic Banking Bulletin for April-June. It reveals that deposits of the Islamic banking industry increased by Rs156 billion or 10% quarter-on-quarter to Rs1,720bn. Deposits of the overall banking industry grew 6.5% over the same period. The share of Islamic banks’ deposits in overall banking industry’s deposits increased to 13.7% at the end of June from 13.2% a quarter ago. This growth helped Islamic banks improve their asset base. The share of Islamic banks’ assets in overall banking assets was 11.6pc at the end of June. Investments also improved thanks to sukuk worth Rs71bn that the government issued in June. Net investments of the Islamic banking industry increased Rs48bn or 9.9% in April-June to Rs537bn. SME financing increased to 3.2% and the share of agricultural financing stood at 0.4% at the end of June.

Al Baraka Bank Pakistan Limited (ABPL) has announced the successful issuance of its A rated privately placed tier-II Modaraba Sukuk. The Rs 1,500 million Sukuk issue was subscribed by a diversified investor base, in total, a number of 12 institutional investors participated in the issue. The Sukuk has a 7 years tenor, is redeemable at maturity and has a Call Option which is exercisable after 5 years with SBP’s consent. ABPL’s first tier II Sukuk issue of Rs 2,000 million was launched in 2014, as the first of its kind transaction in Pakistan. Speaking on the occasion, Shafqaat Ahmed, CEO of Al Baraka Bank Pakistan, expressed his thanks to all the investors for showing their continued confidence in the bank. He also appreciated the support and guidance extended by the State Bank of Pakistan.

Pakistan's Polio Eradication Senator Ayesha Raza Farooq said the country was highly indebted to the Islamic Development Bank (IDB) for its support and acknowledges the critical support of the bank for Polio eradication. The senator was talking to an IDB delegation visiting the National Emergency Operation Centre (NEOC). The IDB delegation was led by Dr Sadik Mohammad Teyeb, senior health specialist of the bank from Jeddah and Inamullah Khan, Country Representative of the Bank in Pakistan. The current epidemiology in the country is quite promising with only 3 Polio cases reported in 2017 compared to 14 reported by 7th August in 2016. The most significant progress has been made in the core reservoirs of Karachi and Khyber-Peshawar which have not reported any Polio case since January and February 2016.

The private pension fund industry grew by over 32% during 2016-2017, and the total assets of the industry crossed Rs25 billion. This growth of the industry has primarily resulted from an increase in participation by general investors and better performance of the stock market.
Thereby investors preferred Shariah-compliant pension products over conventional products. Out of Rs25 billion assets of pension funds, over Rs16 rupees comprise of Shariah-compliant securities.
In 2007 private pension funds were introduced. Currently there are 19 pension funds operating in the market, out of which 10 are Shariah compliant and 9 are conventional. These funds are managed by 10 fund managers. The pension funds provide participants investment options in terms of securities and commodities.
Participants can choose retirement age between 60 to 70 years. On retirement, they can withdraw up to 50% of the accumulated balance in lump sum and the remaining 50% in installments, as pension.

Pakistan's central bank has issued guidelines for banks that want to be fully-fledged sharia compliant, setting a three-year time frame for applicants to complete the process. The rules aim to accelerate the growth of Islamic banking in the country. Eligible applicants must have existing Islamic finance operations and the conversion process must start within six months of approval. After the conversion of conventional branches, the applicant can then apply for a fully-fledged Islamic banking license. Such conversions are rare in Islamic finance but are seen as a way to increase the scale of the bank and widen its reach into under-served rural areas. Islamic banking in Pakistan currently includes five fully-fledged Islamic banks and 16 conventional banks offering Islamic financial products. As of March, they held assets worth 1.9 trillion rupees ($17.9 billion), a 16% increase from a year earlier and 11.7% of total banking assets. However, their capitalization and profitability ratios remain below the industry average.

#Kuwait’s Noor Financial Investment is considering the sale of its 49% stake in Pakistan’s largest Islamic lender Meezan Bank. The stake has a market value of about $396 million at the current market price, according to data compiled by Bloomberg. Noor Financial hired advisers to assess opportunities, but it has not tasked the consultants with either increasing or decreasing its stake in Meezan Bank. Shares in Noor Financial gained 5.9% by 12:30 p.m. in Safat, Kuwait, the highest since April 16. Meezan advanced 3.6% in Karachi trading to a record high.

With a strong background in Middle Eastern banking, Burj Bank has been building a solid reputation based on integrity. Burj Bank was founded in 2007 under the name of Dawood Islamic Bank as a central pillar of Pakistan’s Islamic Banking landscape. In 2011 the bank was renamed and launched as 'Burj Bank Limited', following a massive capital injection by some Middle Eastern investors of the bank. At present, almost 85% of Burj Bank’s shareholding stems from the Middle East, with majority ownership belonging to the Islamic Corporation for Development of the Private Sector (ICD). In 2012 Burj Bank grew its deposit base by 77% and the financing portfolio also reflected a growth of 67%. The branches grew from 50 to 75, reflecting a percentage distribution network growth of 50%. The bank has entered into diverse new lines of business including SME (small- and medium-sized enterprise) banking, investment banking, agricultural financing, cash management and home Musharaka.

The Securities and Exchange Commission of #Pakistan (SECP) announced that it was relaxing regulations for Sukuk issuance in order to develop the Shariah-compliant market. The regulator said the SECP was amending the 2015 Issue of Sukuk Regulations to facilitate the issuers, reduce the cost of issue and ease the regulatory burden. The SECP has invited public opinion on the proposed amendments before their finalisation. The commission has also advised the PSX to come up with proposals for reducing the cost of market-maker for Sukuk issuance, rationalising the minimum size of public offer portion to reduce the cost of issue and organising a seminar with potential issuers to widen awareness. According to the SECP, the Sukuk market has been performing below potential in Pakistan. While the demand is substantial, supply remains short.