(MENAFN- The Peninsula) Pakistan has sold $1bn in Islamic bonds to raise its foreign exchange reserves in line with IMF demands.
The government had initially planned to float $500m worth of the bonds (sukuk) on the global capital market, but was inundated by offers worth $2.3bn. "The government decided to accept offers of $1bn for a five-year tenure at the profit rate of 6.75 percent," the ministry of finance said.
The Sukuk is a Shariah-compliance bond that offers profits rather than interest to its subscribers. Finance Minister Ishaq Dar had marketed the instrument through roadshows in Abu Dhabi, Dubai, Singapore and London.
According to a statement from his office, 35 percent of subscribers came from Europe, 32 percent from the Middle East, 20 percent from North Africa and 13 percent from Asia. Pakistan will use the debt to retire its formidable domestic debts of around $150bn that account for about 50 percent of the country's GDP. The bond will also help raise country's foreign exchange reserves of $13.5bn by another $1bn of the sukuk proceedings.
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