Tribune News Network
Doha
Masraf Al Rayan arm Al Rayan Bank in UK, has become the first bank in the world to issue a public sukuk (Islamic bond) in a non-Muslim country, reinforcing Britan's position as the western hub for Islamic finance.
The transaction is priced at sterling three months' libor plus 80bps, the bank said in a statement on Thursday.
Tolkien Funding Sukuk No 1 Plc (Tolkien Sukuk) is Al Rayan Bank's inaugural securitisation of residential finance backed security (a Sharia compliant alternative to a conventional residential mortgage-backed security or RMBS).
The transaction is secured by a portfolio of prime UK, first-charge, owner-occupied, Home Purchase Plans (HPPs) originated by Al Rayan Bank.
The £250million sterling-denominated sukuk has an expected called weighted average life of three years. The securitisation of residential assets is provisionally rated AAA by Standard & Poor's (S&P) and Aaa by Moody's Investors Service.
Al Rayan's Tolkien Sukuk is the largest ever sterling denominated sukuk issued by a UK entity, following the UK government's £200 million sukuk issued in 2014.
Tolkien Sukuk was oversubscribed with final demand at 155 percent of book, reflecting the strong demand for Islamic financing instruments that exists in the market, and the fact that the UK is well positioned to become the destination of sukuk issuance for Western Europe.
Tolkien Sukuk showcases both the structuring capabilities within the UK legal framework and the capabilities of UK financial institutions such as Al Rayan Bank to produce asset-backed sukuk using homogenous residential assets.
Legal advice on the issuance was provided by Norton Rose Fulbright's London team, and joint lead manager for distribution was Standard Chartered Bank's Financial Institution team in London. Sharia certification of the structure was provided by the Sharia Supervisory Committees of both Al Rayan Bank and Standard Chartered Bank. Demand from investors has been significant, with European RMBS investors and conventional and Islamic banks and pension funds all represented in the final allocation.
Sultan Choudhury, CEO, Al Rayan Bank, said,"The issuance of this ground breaking sukuk is a major landmark in the history of Al Rayan Bank, but it is also a significant development for the global Islamic finance sector which reinforces the UK's position as a global hub for Islamic banking.
"Tolkien Sukuk has been designed to ensure that it is recognisable as high quality liquid qssets (HQLA) and as a securitisation under CRD definitions; this has resulted in high levels of demand from conventional institutions as well as from Islamic investors."
Proceeds raised from the sukuk issuance will be used by Al Rayan Bank to fund further growth in its asset book, which has increased by more than 23 percent over the last 12 months.
The issuance follows Al Rayan Bank's announcement in November 2017 that it had become the first Islamic Bank in the UK to receive an official credit rating.
Moody's judged the Bank's Counterparty Risk Assessment to be Aa3 (equivalent AA-).
Doha
Masraf Al Rayan arm Al Rayan Bank in UK, has become the first bank in the world to issue a public sukuk (Islamic bond) in a non-Muslim country, reinforcing Britan's position as the western hub for Islamic finance.
The transaction is priced at sterling three months' libor plus 80bps, the bank said in a statement on Thursday.
Tolkien Funding Sukuk No 1 Plc (Tolkien Sukuk) is Al Rayan Bank's inaugural securitisation of residential finance backed security (a Sharia compliant alternative to a conventional residential mortgage-backed security or RMBS).
The transaction is secured by a portfolio of prime UK, first-charge, owner-occupied, Home Purchase Plans (HPPs) originated by Al Rayan Bank.
The £250million sterling-denominated sukuk has an expected called weighted average life of three years. The securitisation of residential assets is provisionally rated AAA by Standard & Poor's (S&P) and Aaa by Moody's Investors Service.
Al Rayan's Tolkien Sukuk is the largest ever sterling denominated sukuk issued by a UK entity, following the UK government's £200 million sukuk issued in 2014.
Tolkien Sukuk was oversubscribed with final demand at 155 percent of book, reflecting the strong demand for Islamic financing instruments that exists in the market, and the fact that the UK is well positioned to become the destination of sukuk issuance for Western Europe.
Tolkien Sukuk showcases both the structuring capabilities within the UK legal framework and the capabilities of UK financial institutions such as Al Rayan Bank to produce asset-backed sukuk using homogenous residential assets.
Legal advice on the issuance was provided by Norton Rose Fulbright's London team, and joint lead manager for distribution was Standard Chartered Bank's Financial Institution team in London. Sharia certification of the structure was provided by the Sharia Supervisory Committees of both Al Rayan Bank and Standard Chartered Bank. Demand from investors has been significant, with European RMBS investors and conventional and Islamic banks and pension funds all represented in the final allocation.
Sultan Choudhury, CEO, Al Rayan Bank, said,"The issuance of this ground breaking sukuk is a major landmark in the history of Al Rayan Bank, but it is also a significant development for the global Islamic finance sector which reinforces the UK's position as a global hub for Islamic banking.
"Tolkien Sukuk has been designed to ensure that it is recognisable as high quality liquid qssets (HQLA) and as a securitisation under CRD definitions; this has resulted in high levels of demand from conventional institutions as well as from Islamic investors."
Proceeds raised from the sukuk issuance will be used by Al Rayan Bank to fund further growth in its asset book, which has increased by more than 23 percent over the last 12 months.
The issuance follows Al Rayan Bank's announcement in November 2017 that it had become the first Islamic Bank in the UK to receive an official credit rating.
Moody's judged the Bank's Counterparty Risk Assessment to be Aa3 (equivalent AA-).
