Luxembourg successfully issues landmark Sukuk transaction
Luxembourg issues the first Euro-denominated Sovereign Sukuk. The orderbook is more than 2x oversubscribed. This represents a landmark step in establishing Luxembourg as the global hub for Islamic Finance outside of the Islamic world.
The Grand Duchy of Luxembourg, rated Aaa/AAA/AAA (stable), successfully issued its landmark Sukuk transaction, a €200 million EUR, 5 year Sukuk, the first ever EMU Sovereign to issue in the Sukuk format.
Subsequent to the approval of the Sukuk Law on 12 July 2014, Luxembourg announced a dual team roadshow to be held during the second half of September. The two teams visited Jeddah and Riyadh (Saudi Arabia), Abu Dhabi and Dubai (United Arab Emirates), Kuala Lumpur (Malaysia), Doha (Qatar) and London (United Kingdom). The comprehensive roadshow allowed Luxembourg to showcase its strong and stable credit story to a wide range of international investors.
Following positive market conditions on Tuesday 30th, initial price thoughts of MS Flat/-2bps were released at early morning London time. The orderbook achieved good momentum within the early hours of the day, which allowed for a subsequent price revision at the tight end of guidance of MS - 2bps. The Sukuk priced early afternoon London time, at a profit rate of 0,436%, with a final orderbook more than two times oversubscribed, from a total of 29 accounts placing orders.
The book was driven by demand across high quality fixed income investors across a wide geographical base. In terms of geographic distribution, 61% was placed in the Middle East and North Africa, 20% in Europe and 19% in Asia, whilst allocation by investor type was 50% to Central Banks and Official Institutions, 40% Banks and 10% to Asset Managers.
Proceeds of the issuances will be used for general budgetary purposes. The issue will be settled through LuxCSD and Euroclear/Clearstream.
Pierre Gramegna, minister of Finance states: “I am most pleased with the success of this transaction, which illustrates Luxembourg’s commitment and expertise as a leading center for Islamic finance in the Eurozone.”
HSBC and BNP Paribas act as the Joint Structuring Advisors/Joint Bookrunners and Banque Internationale a Luxembourg and QInvest as co-lead managers for the Sukuk issue. HSBC also acts as Coordinator.
The Sukuk will be listed and admitted to trading on the Euro MTF market of the Luxembourg Stock Exchange (LuxSE).
30 September 2014
Ministry of Finance