Pakistan has raised $390 million through its first hybrid Sukuk issuance, the finance ministry said on Thursday, marking a new addition to the country’s Shariah-compliant debt instruments.

The Sukuk, issued through an auction process in collaboration with the State Bank of Pakistan, Pakistan Stock Exchange and Securities and Exchange Commission of Pakistan, combines two Islamic financing structures — Ijarah Sale and Lease Back (SLB) and Commodity Murabaha.

The hybrid Sukuk allocates 55% of proceeds to Ijarah SLB and 45% to Commodity Murabaha, providing a mix of asset-backed leasing and cost-plus financing structures.

The issuance included a one-year fixed-rate discounted Sukuk and a 10-year variable rental rate (VRR) Sukuk. The one-year instrument was priced at 11.80%, while the 10-year VRR Sukuk was set at 11.7185%.

According to the ministry, the offering attracted bids exceeding the target, with total subscriptions reaching 1.45 times the initial $718 million target.

Officials said the hybrid structure is expected to broaden investor participation and deepen Pakistan’s domestic Islamic debt market.

Khaliq Uz Zaman, director of domestic debt at the Finance Ministry, described the issuance as a milestone for the sector, adding that it could help diversify the investor base and support efforts to reduce borrowing costs over time.

Murabaha structures involve the sale of assets at a disclosed cost plus a profit margin, while Ijarah contracts involve leasing assets in exchange for rental payments.

The issuance comes as Pakistan continues to expand its use of Shariah-compliant instruments to meet government financing needs and develop its Islamic finance ecosystem.

The European Bank for Reconstruction and Development has increased its trade finance facility to Arab Islamic Bank by an additional $5 million, bringing the total limit to $10 million to support Palestinian import and export activity.

The expanded financing, provided under the EBRD’s Trade Facilitation Programme (TFP), aims to enhance trade flows between the West Bank and international markets at a time when access to global banking services remains constrained.

“The expanded limit to AIB will facilitate further trade flows between the West Bank and international markets, enabling the issuance of trade finance instruments,” the EBRD said in a statement, highlighting the bank’s role in supporting the resilience of the local financial sector.

AIB joined the TFP in 2023 with an initial limit of $2 million, which has since been increased twice in response to the bank’s growing trade finance activity. The facility has been used to support several transactions, including the import of essential goods such as food and medical equipment.

AIB is the largest Islamic bank operating in the West Bank and Gaza and is a subsidiary of Bank of Palestine, an EBRD client since 2020. Through the programme, AIB has gained access to a global network of more than 100 issuing banks and over 800 confirming banks. Its staff have also participated in EBRD-led training and workshops on trade finance best practices.

Launched in 1999, the EBRD’s Trade Facilitation Programme supports international trade by providing guarantees and short-term financing to participating banks and factoring companies, enabling them to extend funding to local exporters, importers and distributors.

Since commencing operations in the West Bank and Gaza in 2017, the EBRD has approved 38 projects with a total investment volume of €196.5 million, underscoring its ongoing commitment to strengthening the Palestinian financial sector and facilitating economic activity.

Egypt-based fintech Lucky has raised $23 million in a Series B funding round comprising both equity and debt, as it looks to expand its credit offerings and scale operations across North Africa, the company said in a statement.

The round included participation from Disruptech Ventures, Development Partners International (DPI) through its Nclude platform, Suez Canal Bank, and OneStop, led by investor Mohamed Farouk, who has also been appointed chairman of Lucky’s board.

The company said the new funding will be used to strengthen its credit products, invest in technology infrastructure, and support regional expansion, while preparing for regulatory developments tied to digital banking and payments.

Lucky is also working toward obtaining a payment service provider (PSP) licence, which would enable it to broaden its digital financial services offering in line with evolving regulations in Egypt.

The company’s expansion comes as Egypt advances its digital finance agenda, with regulators introducing new frameworks aimed at improving financial inclusion and enabling fintech growth.

Dubai’s benchmark stock index rose nearly 7%, after the US and Iran agreed on a two-week conditional ceasefire in a conflict that has had profound socio-economic impacts on the region. 

The Dubai Financial Market General Index rose 6.91% or 373 points to close at 5777.47 on Wednesday. Real estate companies, banks and airlines reported the highest gains, with Dubai’s flagship develop Emaar rising 13%. Emirates NBD, the emirate’s largest bank by assets registered 10.67% in gains while Dubai Islamic Bank rose 6%. 

The Abu Dhabi Stock Exchange also registered modest gains of 2.84% on Wednesday, giving a much-needed respite to investors. 

Energy markets welcomed the pause, with WTI crude oil futures dipping more than 15% to below $93 per barrel on Wednesday. Brent crude oil futures tumbled more than 15% toward $91 per barrel, according to the Trading Economics website. 

The ceasefire is contingent on the reopening of the Strait of Hormuz, a vital waterway which facilitates the passing of substantial amounts of oil, gas and non-energy products. 

Arab countries could suffer staggering losses of up to $200 billion due to the Iran conflict, with the military escalation potentially wiping out between 3.7%-6% of the region’s collective gross domestic product (GDP). 

Pakistan’s Securities and Exchange Commission (SECP) has approved the country’s first Shariah-compliant credit risk-sharing product, aimed at improving access to financing for micro, small and medium enterprises (MSMEs) and the agriculture sector, the regulator said on Saturday.

The product, developed by the National Credit Guarantee Company Limited (NCGCL), introduces a risk-sharing mechanism designed to reduce credit exposure for financial institutions while remaining aligned with Islamic finance principles. It offers an alternative to conventional credit guarantees, which are typically interest-based.

According to the regulator, the product, which has not yet been formally named, is structured as a Takaful-based credit guarantee built on the principle of tabarru. It has also advised NCGCL to introduce a brand identity and consider establishing an Islamic window to offer similar solutions.

The SECP’s Shariah Advisory Committee reviewed and approved the structure, confirming its compliance with key Islamic finance principles, while recommending stronger governance and documentation frameworks to support implementation.

The approval comes as Pakistan accelerates efforts to transition its financial system toward Shariah compliance, following a 2022 directive by the Federal Shariat Court to eliminate interest-based banking by 2027. Authorities have since introduced reforms, including legal amendments and the expansion of sukuk issuances to replace conventional government debt instruments.

According to the SECP, the new product is expected to support financial inclusion and responsible lending by enabling banks and financial institutions to extend financing to underserved segments of the economy.

Uzbekistan has introduced a legal framework for Islamic banking after President Shavkat Mirziyoyev signed amendments to the country’s legislation, enabling the provision of Shariah-compliant financial services and supporting the diversification of its financial sector.

The newly adopted law, titled “On Amendments and Additions to Certain Legislative Acts of Uzbekistan,” sets out the regulatory basis for Islamic banking activities, aiming to expand access to finance for individuals and businesses while attracting international investors and enhancing competition within the banking industry.

“The introduction of this framework is expected to broaden access to financial services for both the general population and the business community,” the government said, adding that the initiative is designed to strengthen the country’s financial ecosystem and support economic development.

Under the legislation, Islamic banking institutions will be permitted to offer a range of Shariah-compliant services, including profit-and-loss sharing investment deposits, client financing through agency agreements, and equity participation in businesses. The law also allows financing through credit sales of goods, advance payments for commodities, and Islamic leasing arrangements that provide clients with the option to acquire ownership of assets.

The framework stipulates that only legal entities holding a licence issued by the Central Bank of the Republic of Uzbekistan will be authorised to conduct Islamic banking activities. These licences will be granted without an expiration date and will be non-transferable, ensuring regulatory oversight and operational stability.

The law is scheduled to come into effect three months after its official publication, allowing the Central Bank and financial institutions time to prepare for the rollout of Islamic financial services. The move positions Uzbekistan among a growing number of countries seeking to integrate Islamic finance into their banking systems to support financial inclusion and attract cross-border investment.

The Government of Pakistan raised $425,000 (Rs118.05 billion) in its 32nd auction of Government of Pakistan Ijarah Sukuk (GIS), reflecting continued demand for Shariah-compliant sovereign instruments, according to data from the Pakistan Stock Exchange.

The auction drew total bids of $1.5 million (Rs445.49 billion), indicating strong participation from investors and liquidity within the Islamic banking sector.

Meezan Bank, acting as the lead joint financial adviser, supported the structuring and execution of the transaction.

The government accepted one-year sukuk at a rental rate of 11.49%, while five-year fixed-rate sukuk were priced at 11.75%.

The 10-year variable rental sukuk also attracted notable demand, suggesting increasing investor interest in floating-rate Shariah-compliant instruments.

The sukuk issuance comes as Pakistan advances efforts to transition towards an Islamic financial system following the 26th Constitutional Amendment, which mandates the elimination of interest-based financing.

In this context, sukuk instruments are expected to play a larger role in meeting the government’s financing needs while maintaining compliance with Shariah principles.

The response to the latest auction highlights investor appetite for sovereign Islamic securities as the country expands its Shariah-compliant financing framework.

Azerbaijan’s Turan Bank has signed a $15 million financing agreement with the Islamic Corporation for the Development of the Private Sector (ICD) to expand funding for small and medium-sized enterprises (SMEs) in the country.

Under the five-year agreement, ICD will provide a line of finance aimed at improving access to capital for private sector businesses and supporting SME growth in Azerbaijan.

The agreement was signed by Khalid Khalafallah and Orkhan Garayev.

The financing is expected to support business activity across Azerbaijan, particularly in non-oil sectors, as the country seeks to diversify its economy and strengthen private sector participation.

Turan Bank said the facility aligns with its strategy to expand SME financing and promote the development of Islamic finance solutions within the local market.

For ICD, the agreement forms part of its broader mandate to support private sector development across member countries of the Islamic Development Bank Group, with a focus on SMEs as a driver of economic growth.

The latest deal marks the sixth financing collaboration between Turan Bank and ICD since 2008, reflecting an ongoing partnership between the two institutions.