Goldman Sachs and South Africa choose Luxembourg to list debut sukuk
The sukuk was issued via a special purpose vehicle named JANY Sukuk Company with Goldman Sachs Group acting as guarantor of the issue. This issue invests in Sharia-compliant commodities and comprises USD 500 million of trust certificates that come to term after five years, with distribution payments semi-annually.
The structure of the issue is that of a sukuk al-wakala. Under this arrangement, funds are entrusted to an agent (the “wakeel”) and a special purpose vehicle issues trust certificates entitling the holders to a return on their investment and a right to buy all or a proportion of the underlying assets or investments.
The second sukuk, to be listed on 24 September, is the debut Islamic bond issue from the Republic of South Africa.
The USD 500 million sukuk will also be the first sukuk in Africa to be issued in US dollars. It will mature in June 2020 and pay a semi-annual distribution of 3.903%.
This issue, which was more than four times oversubscribed in the primary market, is part of South Africa’s drive to broaden its investor base. It uses an al-ijara structure, a form of lease contract.
A third Islamic bond listing is expected in the coming week.
The LuxSE has been active in providing services for Islamic finance since 2002, when it was the first European Exchange to list a sukuk.
Luxembourg is the largest domicile for Islamic funds in Europe, and the third largest domicile for Islamic funds worldwide, after Malaysia and Saudi-Arabia.