The Liquidity Management Centre (LMC), in coordination with the Bahrain Monetary Agency (BMA), is launching a US$250 million, five-year Islamic leasing bond issue (Ijara sukuk).
This is BMA’s seventh issue of Ijara sukuk, bringing to a total of US$730mn the value of Islamic leasing bonds issued, and the first to be made through a market maker.
Bahrain-based LMC is the arranger and manager of the issue, which is being underwritten by eight major banks.
Lead managers to the issue are Kuwait Finance House (KFH) and National Bank of Bahrain (NBB), while other participants in the consortium, as co-lead managers, are Islamic Development Bank (IDB), Dubai Islamic Bank, Credit Agricole Indosuez, Maybank, Bank of Bahrain and Kuwait (BBK) and Bahrain Islamic Bank.
The issue starts on
The rental return on the sukuk will be 60 basis points over the London inter-bank offered rate (Libor) for six months.
The return will be paid twice a year on November 27 and May 27 each year.
“We are delighted by the response from the banking community to underwrite this issue,” says HE Khalid Abdulla Al Bassam, deputy governor of the BMA, the central bank of Bahrain
The underwriters, four Islamic banks and four conventional banks, are among the largest banks in the countries of their incorporation, with offices in the kingdom.
Waleed Rashdan, executive director, banking operation, at the BMA points out that the upcoming offering is the first to be made by the agency through a market maker. All previous offerings of Ijara sukuk by the BMA have been made directly by the agency.
“We chose this route to attract a wider spectrum of investors,” he says. “It is also a more market-oriented approach and will support the further growth and development of Islamic financial industry.”
Subscriptions for the sukuk will be received by the LMC from
All commercial banks, Islamic financial institutions and national insurance companies operating in Bahrain are allowed to subscribe to the sukuk.
Individual and institutional investors can also subscribe through the participating institutions.
The sukuk will be allocated on pro rata basis, with preferential allotment to the underwriters.
Minimum subscription has been set at US$10,000, which is also the par value of each sukuk.
“We are gratified at having been selected by the BMA to arrange and manage this issue of Ijara sukuk and with the support we have received from the shareholders and the underwriting group,” says Hussain Mohammed Al Meeza, chairman of LMC.
“This type of structuring will go a long way in encouraging cross-border investment in Islamic financial instruments as well as stimulating the Islamic capital market.”
The sukuk will be listed and traded on the Bahrain Stock Exchange. They can also be traded at prevailing market prices, over-the-counter through the participating banks.
The guarantor enjoys a rating of A- from international rating agencies, Standard & Poor’s and Fitch-Ibca.