Not “selling” Dharumavantha, leasing under SPV beneficial ownership: Ameer

Finance Minister Ibrahim Ameer | Photo: Corporate Maldives

Male’, Maldives –  Ministry of Finance has announced that they are not selling Dharumavantha Hospital building, but rather proceeding with a re-transfer of the beneficial ownership of the building to a 100 percent government owned SPV, for the issuance of a USD300 million Bond.

A statement by the Ministry of Finance explains that the USD 300 Million bond is a budgeted revenue stream to bring in much needed cash flow for the government to finance the 2021 budget and that it is an Islamic Financing Instrument planned for issue after discussions with notable international experts.

The statement revealed that the the bond, which is to be sold through the Islamic Corporation for the Development of Private Sector (ICDC), is an asset based sukuk, which means the issuing government makes a 100 percent Government owned Special Purpose Vessel (SPV) and transfers beneficial ownership of an asset, in this case, Dharumavantha Hospital to the SPV. Then, acting for the sukuk investors, the SPV then leases the asset under an agreement to the issuer; The Ministry of Finance.

And after the sukuk term ends, the The Ministry of Finance will repurchase the asset from the SPV. The statement stresses that this is not a sale of the building to any party. “Ownership of Dharumavantha Hospital does not leave the Finance Ministry at any point of the sukuk, and during any phase of sukuk issuing, the building cannot be mortgaged ” stated the Ministry of Finance.

The statement adds that during 2017, the government attempted to issue such a sukuk using Finance Ministry owned buildings, but were not able to due to some issues.

The Ministry of Finance stated that Islamic debt instruments such as the sukuk are widely used but the global financial market, and that non-Islamic governments have also issued such debt instruments. The statement concluded with a call to stop the spread of misinformation on the matter.