29 June – LAWFUEL – The Law News Network – Linklaters has advised Deutsche Bank and HSBC as joint arrangers on the establishment of the first programme for Sukuk issues in the form of a Trust Certificate Issuance Programme (TCIP). This Programme is the first instance of applying MTN style issuance documentation to Shari’a compliant Sukuk issues, the intention being to streamline the documentation process for future issues which will enable IDB to react quickly to market opportunities and reduce their issuance costs.
The key feature for Shari’a compliant finance is the absence of a right to interest, with each Sukuk (or Trust Certificate) representing an ownership interest in underlying assets. In the case of the IDB TCIP, the underlying assets will be Shari’a compliant lease (ijara) and other financings made to borrowers in IDB member countries. Holders of the Trust Certificates will receive distributions of the profit generated from the underlying assets and, with the benefit of a liquidity facility provided by IDB, these distributions will be regular in nature.
The programme has a limit of US$1 billion with the first drawdown in an amount of US$500 million.
Andrew Roberts, the head of Islamic capital markets at Linklaters, commented:
“This new and exciting transaction is a further step in the development of the Islamic Finance market and our Islamic finance practice which seeks to combine our extensive capital markets expertise with cutting edge Islamic finance know-how. We look forward to more of these types of transactions as the Islamic Finance market continues its explosive growth.”
The Linklaters team was led by Andrew Roberts and included Katsumasa Suzuki, Jasper Evans and Kirsten Russell. Clifford Chance advised IDB.