By Marisa Wong
Morgantown, W.Va., Feb. 14 – Al Rayan Bank plc announced it priced £250 million of sukuk (Aaa/AAA/) at Libor plus 80 basis points.
Al Rayan said it is the first bank in the world to issue a public Islamic bond in a non-Muslim country. This is also the largest sterling-denominated sukuk issuance by a U.K. entity to date, following the U.K. government’s £200 million sukuk deal in 2014.
Tolkien Funding Sukuk No.1 plc is Al Rayan’s inaugural securitization of residential finance backed security, which is a Sharia-compliant alternative to a conventional residential mortgage-backed security (RMBS). The transaction is secured by a portfolio of prime U.K. first-charge owner-occupied Home Purchase Plans (HPPs) originated by Al Rayan.
The Tolkien sukuk have an expected called weighted average life of three years.
The deal was oversubscribed with final demand at 155% of book, reflecting the market’s strong demand for Islamic financing instruments and the fact that the United Kingdom is well positioned to become the destination of sukuk issuance for Western Europe, the bank said in a press release. Investors included European RMBS investors and conventional and Islamic banks and pension funds.
Standard Chartered Bank acted as joint lead manager for distribution.
Al Rayan said it will use proceeds to fund further growth in its asset book.
The Islamic bank is based in London.
| Issuer: | Al Rayan Bank plc
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| Issue: | Islamic bonds (Tolkien Funding Sukuk No.1 plc)
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| Amount: | £250 million
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| Coupon: | Libor plus 80 bps
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| Weighted average life: | Three years
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| Manager: | Standard Chartered Bank
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| Ratings (provisional): | Moody’s: Aaa
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| S&P: AAA
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