The government plans to raise USD 200 million via a five-year U.S. dollar sukuk/Islamic bonds, 10.5% yield, as reported by Reuters and The Financial Times.
Credit Suisse, Emirates NBD Capital, HSBC and the Islamic Corporation for the Development of the Private Sector (ICD) are arranging the agreement for the bond as per the document.
A ‘sukuk’ or Islamic bond is an Islamic financial certificate, similar to a bond in Western finance, that complies with Sharia. Since the traditional Western interest-paying bond structure is not permissible, the issuer of a sukuk essentially sells an investor group a certificate, and then uses the proceeds to purchase an asset that the investor group has direct partial ownership interest in. The issuer must also make a contractual promise to buy back the bond at a future date at par value.
Government is expected to use the sukuk to finance more development projects.