Dubai, UAE – USD 200 million islamic bond which is a budgeted revenue stream to bring in needed cash flow for the government to finance the 2021 budget is to be settled on April 8, 2021.
According to ‘Reuters’, Credit Suisse CSGN.S, Emirates NBD Capital ENBD.DU, HSBC HSBA.L and the Islamic Corporation for the Development of the Private Sector (ICD) are arranging the deal, which is expected to close on April 8.
While the bonds were rated B3 by Moody’s and the settlement of the issue will be on April 8, ‘Reuters’ also reported that the 144A/ Reg S bonds would be issued at a discount and the tender proceeds would be capped in alignment of the net proceeds of the new issue.
Finance Ministry had previously told that Dharumavantha Hospital building will be mortgaged under a Government owned Special Purpose Vessel (SPV) for the purpose of the USD 200 million sukuk.
Ministry had also stated earlier that when the sukuk term ends, the Ministry of Finance will repurchase the asset from the SPV. The statement released by ministry on November 11, 2020 stressed that this was 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 mortgagedMinistry 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.
Dharumavantha Hospital was constructed during former President Abdulla Yameen Abdul Gayoom’s administration. Contracted over to Singapore’s Shenhua Construction, it is the most expensive state-funded building, at USD 143 million (MVR 2.2 billion).
REG S bonds are those that are not registered with the U.S. Securities & Exchange Commission and cannot be sold to a U.S. investor, whereas 144A offerings are U.S. private placements for U.S. investors.