International law firms King & Spalding and Allen & Overy are advising Islamic mortgage lender Tamweel on a planned $235 million asset-backed Islamic bond, or sukuk, according to a preliminary prospectus.
King & Spalding is advising the joint lead managers on the deal regarding the structuring of the sharia-compliant trust certificates, which are due to mature in 2046. The Abu Dhabi Commercial Bank, UBS, and Emirates NBD have been mandated as joint lead managers on the deal, and have helped to arrange the series of investor meetings held this week. A final roadshow will be held on June 25 in London.
Allen & Overy is serving as adviser to Tamweel, a unit of the Dubai Islamic Bank. This latest issuance is the second time the lender has tapped global debt markets this year. Tamweel issued a $300 million, five-year sukuk in January, fully guaranteed by its parent company. DIB itself had issued a $500 million sukuk in May this year.
Islamic bonds have been gaining popularity in recent months, with issuers seeking out Islamic liquidity as capital markets tighten in the face of the European debt crisis. But most issuances remain asset-based, in which the issuer owns the assets which are used in documentation as a pledge, but provide little legal recourse to assets for investors in the event of a default.
Asset-backed sukuk, in which the underlying asset changes hands through a special purpose vehicle, are often seen as being closer to the spirit of Islamic law since they allow investors to become the legal owners of underlying assets. Tamweel’s latest planned issuance will be backed by properties within Dubai and the receivables generated by these properties. ALB
Shaheen Pasha is Middle East Regional Editor at ALB. Follow her on Twitter: @ALB_The Brief.
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