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The Current Prospects for Risk-Sharing Sukuk
Date : 11 September 2013
Presented by : Rafe Haneef, CEO of HSBC Amanah Malaysia Berhad
3
Evolution of the International Sukuk Market Stellar growth however all landmarks achieved so far involve risk-transfer
Size of Global Sukuk Market*
(USD bn) 61.9 4.6 10.7 134.6 212.6 107.9 225.8
2002 Government of
Malaysia
USD 600mn 5 year Sukuk
1st global sovereign Sukuk
2006 Khazanah Nasional
USD 750mn 5 year Exchangeable Sukuk
1st exchangeable Sukuk
2012 Government of
Dubai
USD 600mn / 650mn 5 / 10 year Dual-tranche Sukuk
1st unrated 10-year Sukuk
2013 Saudi Electricity
Company
USD 2bn / 2bn 10 / 30 year Dual-
tranche Sukuk
1st international 30 year Sukuk
2003 State of Qatar
USD 700mn 7 year Sukuk
1st GCC Sukuk
1st subordinated bank capital Sukuk
2012 Abu Dhabi Islamic
Bank
USD 1bnTier 1 Perpetual Sukuk
1st perpetual Sukuk
2010 Nomura
USD 100mn 2 year Sukuk
1st Sukuk by Japanese issuer
2009 International
Finance Corp.
USD 100mn 5 year Sukuk
1st Sukuk by non-Islamic Supranational
2004 State of Saxony-
Anhalt
EUR 100mn 5 year Sukuk
2009 GE Capital
USD 500mn 5 year Sukuk
2007 Maybank
USD 300mn 10 year Subordinated Sukuk
1st Sukuk by US issuer
1st European Sukuk
*Source: Dealogic 10th June 2013
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Global Sukuk Market Update Some signs of risk-sharing emerging but 98% of sukuk remain risk-transfer
Source: HSBC, Dealogic 3rd September 2013
Historical Sukuk Issuance Volume Since 2008
Total Sukuk volume issued globally since 2008 has surpassed USD 160 bn
· The last USD issuance in the Sukuk market was the USD 1bn 1.535% 5 year Sukuk by the Islamic Development Bank, the only Supranational issuer to issue in Islamic format. This however is a risk transfer sukuk.
· The landmark transaction this year has been the dual-trache 10 & 30-year Sukuk for Saudi Electricity Company (SEC). This marked the first ever issuance of a 30-year Sukuk in the international debt capital markets. No risk-sharing feature though.
· Hybrid capital continues to be an important theme in the Sukuk market, with Dubai Islamic Bank issuing a US$1bn Tier-1 Sukuk in March and Bank Asya issuing a US$250m LT II Sukuk in April. This deal featured elements of risk sharing.
· Since 2010, project finance sukuk have become popular in Malaysia. Notable Sukuk deals include:
- TTM (Trans-Thai Malaysia) Sukuk Bhd (2010) – MYR 600m Sukuk with a maximum tenor of 15 years;
- Tanjung Bin Energy Issuer Bhd (2012) – MYR 3.29 billion Sukuk with a maximum tenor of 20 years;
- Kimanis Power Sdn Bhd (2012) – MYR 860 million Sukuk with a maximum tenor of 16 years; and
- TNB Northern Energy Bhd (2013) – MYR 1.625 billion Sukuk with a maximum tenor 23 years.
· These recent issues demonstrate that some elements of risk-sharing are beginning to emerge.
57% 21%
14%
8%
MalaysiaMiddle East (Excl. Saudi Arabia)Saudia ArabiaRest of the World
Volume by Region 2008-2013YTD
Volume by Currency 2008-2013YTD
55% 28%
10% 7%
MYR USD SAR Other
Volume by Tenor 2008-2013YTD
46%
10%
22%
22%
0-5 5.1-7 7.1-10 >10.1
19.5
25.8 25.5
34.0
44.9
22.2
-
10
20
30
40
50
2008 2009 2010 2011 2012 2013 YTD
USD
Bill
ions
Malaysia UAE Saudi Indonesia Qatar Turkey Others
6
· Sukuk is a plural of the word sakk which means certificate, legal instrument, deed or cheque.
· Sakk may sound unfamiliar to many, but it is actually a forerunner of the word “cheque”
· It is a well-documented fact that many commercial practices and customs of the Muslim world were transmitted to medieval Europe through Islamic Spain.
· Types or classifications of Sukuk:
- Senior Unsecured Sukuk – in a winding-up, ranked junior to secured creditors but senior to equity holders
- Subordinated Sukuk – in a winding-up, ranked junior to unsecured creditors but senior to equity holders
- Secured Sukuk or asset-backed Sukuk – in winding-up, ranked senior to all creditors and equity holders
· Examples of risk sharing sukuk include:
- Project finance Sukuk
- Hybrid perpetual Sukuk
Definition and Classifications of Sukuk
Risk Transfer
Risk Transfer
Risk Sharing
8
Risk-Sharing in a Project Finance Transaction
Risk Mitigant
Construction
Construction contracts Completion guarantee from sponsors Performance security from contractor
Technology
Track record, LT services agreement, licensing agreement
Operation / Maintenance
Experience of operator, O&M contract
Market
LT purchase agreements, competitive analysis, market study
Supplier LT supply contract, market study
Risk Mitigant
Sponsors Relationship, experience, letter of credit
FX / Rates / Inflation
Indexation, hedging
Regulatory / Country
Country rating, contracts, Due diligence if necessary, political risk insurance
Tax / Accounting Due diligence
Environment / Reputation
Due diligence, experience of sponsors / operator
Natural Disaster
Insurance, contracts
Structure Contracts, legal due diligence
Sponsor(s)
Project Company Financiers
Export Credit Agency
30% Equity
70% Non-recourse
financing
Guarantee (Optional)
9
Exercise of purchase undertaking
Purchase price
Case Study 1: Project Finance Sukuk Structure MYR 860 million Sukuk Issuance by Kimanis Power Sdn Bhd
Transaction flow
Cash flow
The Kimanis Sukuk structure is based on the combination of Istisna’ and Ijarah concepts
At inception, KImanis sells the project to the Trustee, acting on
behalf of the Sukuk investors, for a spot payment with deferred
delivery terms (upon completion), and the Trustee
leases the to-be project to Kimanis
Kimanis pays to the Trustee forward lease rentals during the
construction and lease rentals post-construction, which are equal to respective periodic
distribution amounts payable to the investors
At maturity, Kimanis purchases the project from the Trustee at
an exercise price pursuant to a purchase undertaking
It is a structure widely adopted for Islamic project finance
globally; however, the Sukuk might not be tradable on the
secondary market during the construction period for
investors wishing to meet global Shariah compliance
requirements
1. At Inception
Structure Breakdown
2. During Construction & Delivery
4. At Maturity
Sukuk Investors
Trustee (Purchaser,
Lessor)
Kimanis (Seller, Lessee)
Sukuk issue (directly from Kimanis)
Sukuk proceeds
Istisna’ purchase of plant (delivery upon completion)
1 2
3
(Forward) lease of plant
Sukuk Investors
Trustee (Lessor)
Kimanis (Lessee)
Periodic distribution amounts Forward lease rentals
5 4
Sukuk Investors
Trustee (Seller)
Kimanis
(Obligor-Purchaser)
Sukuk redemption (directly to Kimanis)
Dissolution distribution amount
11 Sale of plant
9
Delivery of plant
3. During Operation (post-construction)
Sukuk Investors
Trustee (Lessor)
Kimanis (Lessee)
8
Lease rentals
7
6
Periodic distribution amounts
10
Exercise price
10
On 19 July 2012, Kimanis Power Sdn Bhd (“Kimanis”) priced a
highly successful MYR860 million issuance (“Sukuk”)
under their newly established MYR1.16 billion Islamic Sukuk
Programme (“Sukuk Programme”)
This landmark transaction
represents:
üFirst-ever Istisna-Ijara Ringgit-denominated Sukuk üFirst-ever project bond issued by the PETRONAS group in the power sector üHSBC’s second consecutive project bonds financing transaction with the PETRONAS Group, underlining HSBC’s dedication to committed relationships with their clients
HSBC acted as Sole
Coordinating Bank, Joint Lead Arranger, Joint Lead Manager,
Joint Shariah Advisor and Hedge Provider
Issuer Kimanis Power Sdn Bhd (“Kimanis”) Ratings AA-(IS) (MARC) Format Islamic Sukuk Programme (“Sukuk
Programme”) Programme Size MYR1,160 million Programme Tenor 16 years First Issuance under the Programme Issue Size MYR 860 million Pricing / Settlement Date
19 July / 8 August 2012
Tenor Serial tenors of 4 to 16 years Coupon / Profit 4.25% to 5.5% Governing Law Malaysian Law HSBC Role Sole Coordinating Bank, Joint Lead Arranger,
Joint Lead Manager, Joint Shariah Advisor & Hedge Provider
· Kimanis is a 60:40 joint venture between PETRONAS Gas Berhad and Sabah state owned entity NRG Consortium (Sabah) Sdn Bhd (NRG). NRG is an indirect wholly owned subsidiary of Sabah state’s investment arm Yayasan Sabah Group (YSG).
· The proceeds are to part-finance the development, design and construction of a 285-megawatt (MW) combined-cycle gas turbine power plant in Sabah by Kimanis.
· Under the IMTN Programme, Kimanis plans to issue the sukuk in two series: the first series being the MYR860 million IMTN issuance and the second series being a forward start sukuk of MYR300 million.
· The AA-(IS) (MARC) rated Sukuk Programme reflects a well-structured Power Purchase Agreement, low technology risk, expectation of adequate operating performance, limited fuel supply risk and strong commitment of project sponsors. The stable outlook reflects MARC’s expectations that the construction of the power plant would be compelted on schedule and within budget.
· The project represents the first Independent Power Producer for the PETRONAS group and forms part of PETRONAS’s strategy to develop its power generation business in Malaysia. The project also plays an important role in the Government of Malaysia’s plan to address power requirements in the state of Sabah.
· HSBC secured and executed multiple roles in this transaction despite strong competition, reflecting the close coordination and teamwork across PEF, DCM, Global Markets and Client management functions, allowing HSBC to maximise client value and deal economics.
· This landmark transaction reinforces HSBC’s position as leading provider of project bond and Islamic financing solutions in the Malaysian market. This is our third project bond in Malaysia over the last two years.
Financial Institutions (25%)Funds (21%)Government Agencies (17%)Insurance (37%)
Case Study 1: Kimanis Power Sdn Bhd MYR 860 million Sukuk issuance
Transaction Overview Breakdown by Investor Type
Transaction Highlights
11
On 6 March 2012, Tanjung Bin Energy Issuer Berhad
(“TBEIB”) successfully priced a MYR3,290 million
Islamic Medium Term Notes (“IMTN”) issuance with
tenors ranging from 5 to 20 years.
This ground breaking transaction marks the
commencement of Tanjung Bin’s expansion and serves
to strengthen Malakoff’s position as the leading
independent power producer in Malaysia and the ASEAN
region
HSBC acted as the sole coordinating bank for this
landmark non-recourse project financing for a
greenfield power plant; both for senior and junior facilities
HSBC acted as Joint
Principal Advisor, Joint Lead Arranger and Joint Lead
Manager
Issuer Tanjung Bin Energy Issuer Berhad (“TBEIB”)
Format Islamic Sukuk (Senior) Structure Sukuk Commodity Murabahah Issue Ratings AA3 (RAM) Amount MYR3,290 million Settlement Date 16 March 2012 Tenor 5 to 20 years Coupon / Profit 4.65% to 6.20% Governing Law Malaysian Law HSBC Role Joint Principal Advisor, Joint Lead Arranger &
Joint Lead Manager
· Tanjung Bin Energy issuer Berhad, a wholly owned subsidiary of Tanjung Bin Energy Sdn Bhd, who in turn is wholly owned by Malakoff Corporation Berhad, was structured as a special purpose vehicle to issue Islamic bonds for the development of the new 1,000 MegaWatt super-critical coal fired power plant.
· The Sukuk was part of a financing package which includes a senior facility of USD400 million term loan and a MYR700 million term loan and a junior facility comprising equity loans of MYR1.3 billion.
· The MYR Sukuk transaction was successfully executed through an accelerated 2 hour bookbuilding process and attracted over MYR16.9 billion in bids from a wide group of investors to arrive at an oversubscription rate of more than 5.13x over the issue size of MYR3.29 billion.
· The transaction had a balanced distribution as follows: Funds (18.7%), Insurance Companies (13.2%), Financial Institutions (39.9%0 and Government Agencies (5.0%).
· The MYR Sukuk was rated by RAM, with HSBC leading the ratings process. TBEIB was awarded a rating of AA3 from RAM reflecting the project’s high reliability and credit worthiness and setting a new benchmark for AA3-rated Malaysian project bonds.
· This ground breaking transaction is a significant milestone for Malakoff as it marks the commencement of Tanjung Bin’s expansion and serves to strengthen Malakoff’s position as the leading independent power producer in Malaysia and within the ASEAN region.
· The transaction also marks the first participation of international lender for a power project financing in Malaysia. · This transaction pioneered the Malaysian infrastructure market as the first combined MYR bond and USD loan project
financing for an IPP in Malaysia
FI (40%)Funds (19%)Insurance (13%)Government Agencies (28%)
Case Study 2: Tanjung Bin Energy Issuer Berhad MYR 3.29 billion Sukuk issuance
Transaction Overview Breakdown by Investor Type
Transaction Highlights
12
On 9 October 2011, Saudi Aramco Total Services
Company successfully issued a SAR
3.75 billion Sukuk Musharakah with a tenor of
14 years
This transaction was first project Sukuk issued in the
Kingdom of Saudi Arabia
The structure is based on an istisna contract for
construction together with a forward lease agreement.
The issuer and the obligor
(SATORP) are partners under the Musharakah agreement
and co-lessors under the forward lease agreement.
SATORP is also the
managing partner under the Musharakah agreement and
the lessee under the forward lease agreement.
Issuer Saudi Aramco Total Services Company
Format Islamic Sukuk (Senior) Structure Sukuk Musharakah Issue Ratings Not Rated Amount SAR 3.75 billion Settlement Date 9 October 2011 Tenor 14 years Coupon / Profit 6 month SAIBOR + 95 basis points Governing Law Laws of Saudi Arabia Joint lead managers and bookrunners
Deutsche Securities Saudi Arabia, Samba Capital & Invsetment Management, Saudi Fransi Capital
· The combined value of the Sukuk issuance was SAR3.75 billion (US$1 billion) and received subscription orders in excess of SAR13 billion (US$3.45 billion).
· The SATORP Sukuk was the first project Sukuk instrument in Saudi Arabia. · Pricing for the Sukuk was exceptionally tight given that the yield for the SAR1.8 billion (US$480 million) Sukuk Mudarabah
issued by Saudi International Petrochemical Company (Sipchem) in June 2010 was SAIBOR plus 1.75% per year. Despite this, the Sukuk was still heavily oversubscribed by 3.5 times.
· The offering received strong interest from financial institutions, mutual funds, insurance companies and pension funds as well as certain high net worth individuals.
· The structure is based on an istisna contract for construction together with a forward lease agreement. The issuer, Saudi Aramco Total Services Company and SATORP are partners under the Musharakah agreement and also co-lessors under the forward lease agreement. SATORP is also the managing partner under the Musharakah agreement and the lessee under the forward lease agreement.
· The proceeds of the Sukuk were used to finance SATORP’s planned crude oil refinery in Jubail. SATORP is 62.5% owned by Saudi Aramco and 37.5% owned by Total. The total cost of the Jubail project is estimated at over US$14 billion.
Case Study 3: Saudi Aramco Total Refining and Petrochemical Company (SATORP) SAR 3.75 billion Sukuk issuance
Transaction Overview
Transaction Highlights
14
Perpetual Mudaraba Sukuk Structure Overview
Mudaraba Capital Mudaraba Agreement
SPV (Issuer / Trustee / Rab-al-Maal)
Sukuk Proceeds Sukuk Issue
Investors
1
Obligor (Mudareb)
2
Inception Ongoing & Maturity
Mudaraba Profit (+ shortfall cover, if any) (payable if so elected by
Obligor)
SPV (Issuer / Trustee / Rab-al-Maal)
Dissolution Distribution Amount
Sukuk Redemption
Investors
9
Obligor (Mudareb)
5.1 8
Obligor’s General Pool of Assets
5.2
6 Periodic Distribution Amounts (payable if Mudaraba Profit is paid)
5.3 Excess Allocated
Reserve Account
Excess Profit
Mudaraba Assets
3 Mudaraba Capital (invested into Obligor’s Assets according to Investment Plan)
Obligor’s General Pool of Assets Mudaraba Assets
4 Muradaba Profit
7
Dissolution Mudaraba Capital (+ shortfall indemnity, if any)
Transaction Fund flow
7
~ Steps at inception ~ Steps during ongoing ~ Steps at maturity
1 4
9
3 6
Dissolution Mudaraba Capital
The first ever Tier 1 Sukuk in the international markets is based on a
Mudaraba Agreement entered into by the SPV (as Rab-al-Maal) and the Obligor (as
Mudareb), according to which the Obligor invests the Mudaraba capital (=
Sukuk proceeds) into the Obligor’s assets
The Obligor may elects not to pay a
Mudaraba profit to the SPV at its sole discretion (as long as it is not required to
make such payment due to certain conditions such as dividend pusher and stopper), in which case such Mudaraba profit is credited to a Mudaraba reserve
account
The profit sharing ratio is stipulated in the Mudaraba Agreement. If a Mudaraba
profit for the SPV is not sufficient for expected return (= periodic distribution amount), the Obligor utilise the reserve balance to cover the shortfall or, if the
reserve is not sufficient, may cover the shortfall from its own account
The Obligor may liquidate the Mudaraba
at its option If the Obligot exercises its option and the capital to be returned to
the SPV is less than the SPV’s initial capital contribution, the Obligor is
required to continue investing such capital in the Mudaraba. There is
accordingly no actual liquidation occurs. Alternatively, the Obligor may indemnify
the SPV with respect to the capital shortfall in order to liquidate the
Mudaraba
15
Perpetual Mudaraba Sukuk Cash Flow Illustration - USD100 million, 4% annual profit rate
$100 mn Mudaraba Capital Mudaraba Agreement
$100 mn Sukuk Proceeds Sukuk Issue
Investors
1
2
Inception Ongoing & Maturity
$4 mn pa if Obligor elects to pay
Mudaraba Profit (+ shortfall cover, if any)
$100 mn Dissolution Distribution Amount
Sukuk Redemption
Investors
9
5.1 8
Obligor’s General Pool of Assets
$[80] mn Dissolution Mudaraba Capital
5.2
6
5.3 Excess Allocated
Reserve Account
Excess Profit
Mudaraba Assets
3 $100 mn Mudaraba Capital (invested into Obligor’s Assets according to Investment Plan)
Obligor’s General Pool of Assets Mudaraba Assets
4 $4 mn pa Muradaba
Profit 7
$100 mn Dissolution Mudaraba Capital (+ shortfall indemnity, if any) (= $[80] mn + $[20] mn)
$4 mn pa if Obligor elects to pay
Periodic Distribution Amounts
Transaction Fund flow
7
~ Steps at inception ~ Steps during ongoing ~ Steps at maturity
1 4
9
3 6
SPV (Issuer / Trustee / Rab-al-Maal)
Obligor (Mudareb)
SPV (Issuer / Trustee / Rab-al-Maal)
Obligor (Mudareb)
The cash flow illustration is set out on the opposite
Assumptions:
- The SPV’s initial Mudaraba capital is $100 mn
- The dissolution Mdaraba capital is
$80 mn
- The Obligor elects to liquidate the Mudaraba at a certain time by
indemnifying the SPV with the shortfall cover of $20 mn
16
Breakdown by Geography
Perpetual Mudaraba Sukuk Case Study 1: ADIB’s USD 1 billion Tier 1 Perpetual Sukuk
Breakdown by Investor Type · The transaction, which is designed to comply with the Basel III guidelines and is expected to be eligible
as Tier 1 Capital by the UAE Central Bank, was well received by both regional and international investors, culminating in an orderbook in excess of USD15 billion (representing a 15x oversubscription and the largest oversubscription witnessed in any Sukuk offering globally).
· The issuance followed a series of investor meetings in Asia, the Middle East and Europe. In light of the unique nature of the transaction, the investor meetings commenced in the UAE with the objective of providing investors with sufficient time to understand the combination of Shariah and hybrid capital structuring elements.
· The initial momentum in the orderbook allowed ADIB to release initial price thoughts of “7% area” on 7 November, during the Asia morning. The announcement met with an overwhelming positive response, allowing the orderbook to grow to USD13 billion by the end of the day. As a result, official price guidance was released at “6.50% area (+/- 12.5bps)”, before being tightened again on the back of strong demand. The transaction eventually priced on Thursday afternoon during London hours at the tight end of the guidance at 6.375%, representing one of the lowest coupons for USD Tier 1 issuances in the international markets.
Issuer ADIB Capital Invest Ltd Mudarib Abu Dhabi Islamic Bank PJSC Mudarib Senior Ratings: A2(Moody’s)/ A+(Fitch) – both stable outlook (the Tier 1 issue is not rated) Currency / Format USD / Fixed Rate Regulation S Structure Sukuk Mudaraba Amount USD 1 billion Pricing / Settlement Date 08 November 2012 / 19 November 2012 Optional Call Date 16 October 2018, and on each profit distribution date thereafter Reset Date 16 October 2018. and ever 6 years thereafter to a new fixed rate based on the then prevailing 6yr US Mid Swap Rate + The Initial Credit Margin Periodic Distribution 6.375% p.a., semi-annual payments Issue Price/ Re-offer Spread 100/ 6 year USD MS+539.3bps Listing London Stock Exchange Governing Law English Law (except Mudaraba Agreement which is under Abu Dhabi and UAE Law) HSBC’s Role Structuring Adviser and Joint Bookrunner
Transaction Overview HSBC acted as a Structuring Adviser and Joint Bookrunner
on a market defining Tier 1 transaction for Abu Dhabi
Islamic Bank PJSC (“ADIB”)
ADIB is one of the flagship Islamic banks in the UAE and
the fourth largest Islamic bank globally by assets.
The USD1 billion 6.375% RegS
Tier 1 issue represents the first ever Shariah-compliant Tier 1
issue executed in the international markets and the
first ever Tier 1 instrument issued by a Middle East bank
in the capital markets
HSBC has successfully lead managed all four public USD issues executed by ADIB to
date. This repeat appointment demonstrates HSBC’s strong
position in the Sukuk and FI space. The transaction further reinforces HSBC's position as a market leader in structuring and executing innovative and
customized hybrid capital transactions for financial
institutions clients
Transaction Highlights
Asia (38%)Middle East (32%)Europe (26%)US Offshore (4%)
Private Banks (60%)Fund Managers (26%)Banks (11%)Others (3%)
17
Transaction Overview
On 13 March, HSBC acted as a Structuring Adviser and Joint
Bookrunner on a highly successful USD1 billion
6.250% RegS Tier 1 transaction
The issue represents the second Tier 1 Sukuk executed
in the international markets and the first ever public Tier 1 instrument issued by a Dubai-
based bank in the capital markets.
HSBC has acted as structuring
adviser and bookrunner on both of the international Tier 1
issues from the UAE to date demonstrating HSBC’s strong
position in the Sukuk and FI space
The transaction further
reinforces HSBC's position as a market leader in structuring and executing innovative and
customized hybrid capital transactions for financial
institutions clients globally
· The issuance followed a series of investor meetings in Asia, the Middle East and Europe. In light of the recent ADIB Tier 1 Sukuk transaction, investors immediately understood the combination of Shariah and hybrid capital structuring elements in the offering, allowing the issuer to focus its message on the bank’s credit strengths
· The initial momentum in the orderbook allowed DIB to release initial price thoughts of “7% area” on 12March, during the Asia morning. The announcement met with an overwhelming positive response, allowing the orderbook to grow to USD10 billion by the end of the day. As a result, initial price guidance was released at “6.50% area (+/- 12.5bps)”, before being tightened again on the back of strong demand. The transaction eventually priced on Thursday afternoon during London hours at final guidance at 6.250%, representing the lowest coupon for a USD public Tier 1 issuance in the MENA debt capital markets
· The transaction, which is designed to be eligible as Tier 1 Capital (under both current UAE Central Bank guidelines, as well as prospectively under Basel III), was well received by both regional and international investors, culminating in an orderbook in excess of USD14 billion (representing a 14x oversubscription – second only to the ADIB Tier 1 Sukuk issue executed in November 2012)
· The transaction highlights the strong connectivity between the various relationship, structuring and DCM teams across the UK, UAE and Asia to bring new to market products to HSBC’s clients in the MENA region
Transaction Highlights
Breakdown by Geography
Breakdown by Investor Type
Banks (33%)Private Banks (32%)Fund Managers (29%)Hedge Funds (5%)Others (1%)
Issuer DIB Tier 1 Sukuk Limited Mudareb Dubai Islamic Bank PJSC Currency / Format USD / Fixed Rate Regulation S Status Shariah compliant RegS USD Tier 1 Capital Certificates Issuer Ratings Baa1 (Moodys) / A (Fitch) Amount USD 1 billion Pricing / Settlement Date 13 March 2013 / 20 March 2013 Optional Call Date 20 March 2019, and on each profit distribution thereafter Reset Date 20 March 2019, and every 6 years thereafter to a new rate based on the then prevailing 6 year US Midswap Rate + Initial Credit Margin Maturity Date Perpetual Profit Rate 6.250 per annum Price / Initial Credit Margin 100.00/ MS+495.4bps Listing Irish Listing Governing Law English (except Mudaraba Agreement which is under Dubai and UAE) HSBC’s Role Structure Adviser, Joint Lead Manager, Joint Bookrunner
Perpetual Mudaraba Sukuk Case Study 2: Dubai Islamic Bank’s USD 1 billion Perpetual Sukuk
Middle East (38%)Europe (29%)Asia (29%)US Offshore (4%)
18
Disclaimer
HSBC Amanah Malaysia Berhad (“HSBC”) has prepared this document (the “Document”) for information purposes only. This Document does not constitute a commitment to underwrite or purchase or subscribe for all or any portion of the securities mentioned herein. Any such commitment shall be evidenced only by a fully executed subscription agreement, purchase agreement or similar contractual document. This Document should also not be construed as an offer for sale of or subscription for any investment, nor is it calculated to invite/solicit any offer to purchase or subscribe for any investment. HSBC has based this Document on information obtained from sources it believes to be reliable but which it has not independently verified. HSBC makes no guarantee, representation or warranty and accepts no responsibility or liability for the contents of this Document and/or as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Document. HSBC and its affiliates and/or its or their respective officers, directors and employees may have positions in any securities mentioned in this Document (or in any related investment) and may from time to time add to or dispose of any such securities (or investment). HSBC and/or any of its affiliates may act as market maker or have assumed an underwriting commitment in the securities of any companies discussed in this Document (or in related investments), may sell them to or buy them from clients on a principal or discretionary basis and may also perform or seek to perform banking or underwriting services for or relating to those companies. As HSBC is part of a large global financial services organisation, it or one or more of its affiliates may have certain other relationships with the parties relevant to the proposed activities as set out in this Document, and these proposed activities may give rise to a conflict of interest, which the addressee hereby acknowledges. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient. This Document, which is not for public circulation, must not be copied, transferred or the content disclosed to any third party and is not intended for use by any person other than the addressee or the addressee's professional advisers for the purposes of advising the addressee hereon.