BB’s short-notice Sukuk auction raises participation concerns

Bangladesh Bank (BB) has scheduled the 9th short-term Sukuk auction for June 28 at short notice, raising concerns among banks and investors who say they have had little time to mobilize funds and prepare bids.

Market participants warned that limited participation could affect competitive pricing and efficient yield discovery. Several Islamic banks and institutional investors said the compressed timeline had reduced their ability to take part effectively in the auction. As Sukuk are a key Shariah-compliant investment instrument, broad participation is considered crucial for ensuring fair pricing and maintaining market confidence.

BB spokesperson Arief Hossain Khan said the timing was driven by the need to complete the issuance within June. "It has to be done within June," he said, adding that the central bank would provide longer notice for future Sukuk auctions to facilitate wider participation.

The June 28 auction marks the ninth short-term Sukuk issuance under the government's efforts to diversify financing sources beyond conventional bank borrowing. Short-term Sukuk have become an important liquidity management tool for Islamic banks and a market-based funding source for the government.

Recent Sukuk issuances have been heavily oversubscribed, reflecting strong demand for high-quality Shariah-compliant assets in Bangladesh. The government is increasingly relying on these instruments to reduce pressure on the banking sector, where elevated borrowing costs and rising non-performing loans have constrained lending.