By IFN
Launched on the 30th September at the tight end of initial
price guidance of 0-2bps below midswaps, Luxembourg has
finally priced its much-awaited inaugural Islamic debt at
0.436% – becoming the first sovereign in the eurozone to
issue an Islamic debt.
The ‘AAA’-rated (by Moody’s and S&P) Reg S facility
saw positive demand (although not as high when compared to
earlier debuts by Hong Kong and South Africa) as the
book-building process for the landmark EUR200 million
(US$253.02 million) program reportedly amassed over EUR500
million (US$632.55 million) in orders and was twice
oversubscribed. Carrying a tenor of five years, the
Islamic debt was distributed across 29 accounts, with up
to half of the program taken up by central banks (40%) and
other official institutions, confirmed the finance
ministry.
Although not the first sovereign Sukuk issue out of
Europe, the facility nonetheless marks an important
milestone not only for the Islamic finance industry as it
welcomes growing interest from traditionally
non-Muslim-majority jurisdictions including the UK, Hong
Kong and South Africa, but also for Luxembourg as it
anchors its ambition to become a hub for Shariah compliant
finance.
“The Luxembourg Sukuk issuance is a very positive
development for the Sukuk industry being a rare
euro-denominated Sukuk from a strong ‘AAA’-rated
sovereign,” said Hani Ibrahim, the head of debt capital
markets at QInvest (joint lead arranger of the deal), who
spoke exclusively to IFN. “It’s an issuance that will
cement Luxembourg’s position as one of the premier Islamic
finance centers and potentially boost the development of
Islamic finance across Europe.”
The euro-denominated issuance proved popular among Middle
Eastern investors as they formed the bulk of the
purchasers at 61% while European investors took up 20% and
Asian players 19%.
Banque Internationale à Luxembourg, BNP Paribas, HSBC and QInvest are the transaction’s arrangers.