PIA to Raise Rs. 20 Billion Through Sukuk

Pakistan International Airlines (PIA) is planning to raise financing through Sukuk, worth Rs. 20 billion. The loss-making national airline will have BankIslami as a financial adviser and joint bookrunner, a national daily reported.

According to news reports, the Sukuk will be issued on a corporate level and the proceeds from will lower the losses for PIA. Director Training and Maintenance, Repair and Overhaul (MRO) for PIA, Amir Ali said while speaking to media, that it is a sort of corporate Sukuk as the issuer is a company incorporated under the laws of Pakistan.

“We are coming up with privately-placed listed Sukuk for the aviation industry in addition to the Islamic commercial papers and short term Sukuk,” he said, adding that “Since the Sukuk is backed by the government of Pakistan guarantee and that the issuer is also majority-owned by the government, therefore, it may be classified as sovereign Sukuk.”

K-Electric also recently launched a listed Sukuk of up to Rs. 25 billion for a period of seven years and also much-awaited and anticipated Pakistan energy Sukuk–II worth Rs. 200 billion just marked its first trading day on September 7, 2020, at Pakistan Stock Exchange.

“Point to be noted here is that the Sukuk industry has always been lucrative and is one of the most venerated modes for raising funds,” Ali said.

“It is to be noted that in Pakistan energy Sukuk – II, there were a total of 334 participants which were corporate entities and it also included 190 non-banking financial institutions which is quite positive and broadening the investor base by providing much-needed depth to the Islamic capital and Sukuk market along with competitive price discovery through book building system,” he said.

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