ISLAMABAD: The Ministry of Finance is seeking to appoint financial advisers or lead managers by Oct 15 for theissuance of up to $1 billion sovereign sukuk Islamic bonds on the international capital markets for five to seven years.

In the proposal document released on Saturday, the finance ministry sought information from reputed international banks on the size of sukuk bond,its format, structure and timing of issuance. The interested banks have to submit their proposals within next one month.

The issuance of sukuk is considered as one of the most significant mechanisms for raising finances in the domestic and international capital markets. It is being used extensively in the world as an alternative to conventional syndicated financing.

`The Finance Division is mandated to arrange finances for meeting the current and development expenditure needs of the country, and one way to meet resource gap is by raising finances from international capital markets`, the finance ministry announcement says.

Sukuk are structured insuch a way as to generate returns to investors without infringing Islamic law that prohibits riba or interest.

Sukuk represents undivided shares in the ownership of tangible assets relating to particular projects or special investment activity.

Services of financial advisers or lead managers were being solicited through an open competitive process which is expected to start by mid-October. Well-reputed international or local banks having interest to act as financial advisers or lead managers have been asked to participate in the engagement process.

The participating banks are expected to manage and coordinate the whole range of activities for executing the transaction. Road shows will also be conducted to campaign for the issuance of sukuk.

During 2016-17, the government successfully issued a five-year $1 billion sukuk at 5.5pc in international capital market. The finance ministry document said the government was able to mobilise external flows from multilateral and bilateral development partners and continue d its presence in international capital markets through the issuance of sukuk.