KARACHI: The State Bank of Pakistan has approved the biggest ever issuance of Sukuk bonds worth over Rs 30 billion against the assets of Civil Aviation Authority, Pakistan Today has learnt from reliable sources.
The move came after the Ministry of Finance and Sindh settled their long dispute over the imposition of stamp duty on conversion of assets into the bonds. According to sources, this would be Pakistan’s biggest sukuk bonds issuance, as the central bank was likely to auction the Islamic bonds of Rs 30 to 40 billion worth sometimes this month.
“So far we have WAPDA and Motorway as the biggest issuers of sukuk bonds with below Rs 30 billion offerings,” they added. The sources told Pakistan Today that after success of the initial offering the SBP would be expanding the maximum level of issuance to Rs 180 billion, the current value of the CAA’s assets. The sources said the SBP’s approval of the issuance of such huge interest free bonds would augur well for the federal government that was desperately looking for money to deal with the devastating aftermath of the recent floods.
Besides government, the move would also receive a warm welcome from local Islamic bankers and other financial institutions which despite having huge Rs 350 billion deposits had no such major investment window. “They were demanding such a product for at least a year,” the sources said. The matter was stymied by a quarrel between the Ministry of Finance and Sindh government with the latter insisting on collection of the stamp duty applicable in case of conversion of Rs 180 billion CAA assets into sukuk bonds.
The federal government, the source said, had successfully avoided the levy, that might be amounted to billions, through establishing the Civil Aviation Sukuk Trust (CAST). “After the formation of CAST, the assets would not be converted into sukuk; investors would become shareholders in the trust,” the sources apprised Pakistan Today.The federal government had issued notification for the development of CAST sometimes at the start of this month, the sources said.
