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US reveals appetite for Islamic finance

Sam Jones

Shariah finance showed further signs of cracking thUS reveals appetite for Islamic financee US market this week as DP World closed a $5 billion medium term note programme and $1.5 billion sukuk – with American investors vying for stakes in the deal.

The sukuk is only the second-ever Islamic bond to be offered to US investors and has been offered under Rule 144A. It is the first rated sukuk from a UAE corporate to be offered in America.

The medium term note programme (MTN) is also the largest package of long-dated bonds to be issued in the Middle East, and the sukuk is the region’s largest ever non-convertible bond.

“The transaction represents a number of firsts, including the ability of a company to tap both the bond markets and the shariah-compliant investor base simultaneously,” said Debashis Dey, head of Clifford Chance’s capital markets and structured finance practice in the Middle East.

Under the MTN programme, DP World issued $1.75 billion of 6.85% notes with a 30-year maturity. The $1.5 billion shariah-compliant sukuk has a 10-year maturity and will pay periodic distribution amounts calculated on the basis of 6.25% annually.

Both structures are dual listed on the Dubai International Financial Exchange and the London Stock Exchange.

Clifford Chance acted as adviser to DP World with Maples and Calder as counsel for DP World Sukuk. Linklaters advised the lead managers for both issuances: Barclays, Citi, Deutsche Bank, Dubai Islamic Bank and Lehman Brothers.

 

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