30 January 2005 – LAWFUEL – The Law News Network – Allen & Overy adv…

30 January 2005 – LAWFUEL – The Law News Network – Allen & Overy advised Citigroup Global Markets Limited and The Hongkong and Shanghai Banking Corporation Limited as joint bookrunners and lead managers on the Islamic Republic of Pakistan’s US$600 million Islamic sukuk offering. This was the debut Islamic sukuk offering by the Islamic Republic of Pakistan.

The overall transaction was structured to be compliant with both international capital markets standards and Islamic law (shariah). In this transaction, the issuer, a newly formed Pakistani special purpose company, purchased part of the land comprising the M-2 Motorway (Lahore-Islamabad) in Pakistan from the National Highway Authority of Pakistan and subsequently leased the land to the Government of Pakistan pursuant to an Islamic lease (an ijara). The issuer declared a trust over its rights to the land, the lease and the other transaction documents, and issued the sukuk, which evidenced the beneficial interests in the trust. Under the ijara, the issuer, as lessor, receives regular lease payments, which are then passed on to holders of the trust certificates. On the scheduled redemption date of the sukuk, the Government of Pakistan is under an obligation to repurchase the land and the sale proceeds are used to redeem the trust certificates.

The US$600 million, five-year Regulation S offering was rated “B+” by Standard & Poor’s, the current sovereign rating. The trust certificates are expected to be listed in Luxembourg.

Roger Wedderburn-Day commented:
“Allen & Overy continues to be the counsel of choice on international sukuk transactions. In the past six months, we have advised on a number of Islamic capital markets deals, including the first Islamic sukuk offering by the Kingdom of Bahrain, the first such offering by a European issuer, the State of Saxony-Anhalt in Germany, and more recently, a debut issue by the State of Sarawak in Malaysia. Our role on this transaction further enhances our leading position in the field of Islamic capital markets transactions.”

Anzal Mohammed commented:
“Having advised the banks on the eurobond issue by the Islamic Republic of Pakistan in February 2004, we are delighted to have been appointed as lead international counsel on Pakistan’s second international offering in recent times.”

The Allen & Overy team was led by partner Roger Wedderburn-Day, assisted by Anzal Mohammed and Danielle Holland. Morgan Krone and Torquil Gibbs advised HSBC in its capacity as the Trustee’s delegate. Cornelius, Lane & Mufti were Pakistani legal advisers to Citigroup and HSBC. Each of the Citi Islamic Investment Bank Shariah Board, the HSBC Amanah Shariah Supervisory Committee and the Meezan Bank Limited Shariah Board reviewed the transaction for compliance with shariah principles. Meezan Bank Limited acted as the local structuring adviser.

The Government of Pakistan was advised by Khan & Associates on Pakistani law issues and by Clifford Chance LLP as to English law.

For further information, please contact Roger Wedderburn-Day ([email protected]) in London on +44 (0)20 7330 2823 or Caroline Livesey ([email protected]) in London on +44 (0)20 7330 4380.

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