Euroclear UK & Ireland (EUI), the UK’s central securities depository (CSD), is co-operating with the British government’s debt management office to bring to market the first ever UK sovereign sukuk bond.
The UK becomes the first western nation outside the Islamic world to bring such an instrument, which has been sold to both domestic UK and international investors. Primary issuance of the bond will occur at Euroclear Bank, the Brussels-based international CSD.
The UK’s chancellor of the exchequer, George Osborne, said: “This issuance of Britain’s first sovereign sukuk delivers on the government’s commitment to become the western hub of Islamic finance and is part of our long term economic plan to make Britain the undisputed centre of the global financial system.
“We have seen very strong demand for the sukuk, resulting in a price that delivers good value for money for the taxpayer. I hope that the success of this government issuance will encourage further private sector issuances of sukuk in the UK.”
The £200m (US$340m) sukuk bond, using a sale and lease-back structure, will be issued in Euroclear and will settle in EUI and Euroclear Bank, on 2 July. It is listed on the London Stock Exchange (LSE). Maturing in 2019, the primary issuance was more than 10 times over-subscribed and drew in orders of around £2.3bn.
John Trundle, chief executive officer (CEO) of Euroclear UK and Ireland, said: “We are delighted to provide an issuance, settlement and safekeeping service for this premier UK government sukuk bond. (It) reinforces our commitment to London as it cements itself as a major Western hub for Islamic financing.
“EUI already safekeeps £1.3 trillion worth of gilts on behalf of clients, and furthermore, clients have the choice of holding balances in these sukuk at EUI or Euroclear Bank, our sister international depository. Indeed, Euroclear Bank has a strong history of providing post-trade expertise for Shari ‘a compliant debt – as recently as last year we partnered with Borse Dubai to support asset servicing for our global client franchise purchasing bonds on NASDAQ Dubai’s sukuk trading platform.”
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