Times of Oman
Alizz Islamic Bank acts as joint lead manager for global sukuk issue
June 6, 2017 | 5:00 PM
by Times News Service
Ghalib Al Busaidi, deputy general manager and head of wholesale banking, Alizz Islamic Bank. - Supplied picture
 
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Muscat: Alizz Islamic Bank was selected to act as joint lead manager for the recently issued Government of Oman seven-year US dollar Sukuk, along with a syndicate of global banks, which included Dubai Islamic Bank, HSBC, Standard Chartered, JP Morgan, GIB and Citibank.

“Our selection as joint lead manager for the inaugural issue of the seven-year USD Sukuk is hugely significant and prestigious for Alizz Islamic Bank. The trust that has been placed in us by the Government of Oman to deliver on a global stage is truly appreciated and the issue itself was a huge success despite the challenges associated with the recent credit downgrade by S&P, which appears to have been brushed aside by the global investor community,” said Ghalib Al Busaidi, deputy general manager and head of Wholesale Banking.

“It is clear that global investor confidence in the prospects of the Oman economy is high and this is evident in the significant oversubscription, which resulted in a sizeable tightening in the spread against swaps (as a benchmark) from Initial Pricing Thoughts (IPT),” he added.

Alizz Islamic Bank was the only Omani bank to have been selected to lead the issue as part of the syndicate.



The Sukuk structure is based on Ijarah (lease), which carries a rental rate of 4.397 per cent and matures in May 2024 and was eventually oversubscribed by over three times, with institutional investors from Asia, Middle East, Europe and the United States taking up the offer.

The eventual size of the issue was $2 billion as planned at the outset, which resulted in investors receiving a lower allocation than they required.

Al Busaidi further elaborated, “Having seen the huge success of the conventional bond issue earlier in the year where the Government of Oman issued the five-year, 10-year and 30-year maturities, which were oversubscribed four times, we were hopeful that the seven-year Sukuk would be well received globally, and it certainly was.”

“Unsurprisingly, the Middle East and North Africa (Mena) region was the dominant category of investors, with European investors also showing very healthy demand. The Sukuk was not only confined to Islamic investors with conventional accounts also constituting significant demand for the issue,” he further added.

“This deal heralds a new age for the Sultanate of Oman with the first publicly placed sovereign international Sukuk issuance,” said Naveed Ali, executive vice-president and chief of Corporate Banking, Dubai Islamic Bank (DIB).

“DIB has been a major player in the Islamic debt capital market space since the inception of the Sukuk product and has participated in most landmark Islamic bonds. The tremendous interest generated from across the globe by the Oman sovereign Sukuk illustrated an excellent and balanced distribution emanating from the Middle East, United States, Europe and Asia, clearly indicating a substantial demand for quality credits from across the globe.”

“This is underpinned by the fact that the issuance was over-subscribed by nearly three times, which allowed for the tightening of IPTs by 35 bps, thus demonstrating that the appetite for Gulf Cooperation Council sovereign credits remains strong even in these challenging times. I congratulate the Sultanate of Oman on this key successful milestone deal,” he added.

Al Busaidi further explained: “Most importantly, however was the eventual pricing which was the biggest success at 235 bps over swaps (as a benchmark) resulting in a rental rate of 4.397 per cent. I think this should give confidence to other GRE’s and corporates, considering their USD funding options as Sukuks are a viable tool to raise funding. We at Alizz Islamic Bank have a strong and capable investment banking team that is able to provide support to state entities and corporates wanting to tap the capital markets, both locally in Omani Rials, as well as globally in USD through various innovative Sharia-compliant structures, including sukuks and funds.”

“Structured and project financing is another specialised area, where our team identifies and arranges necessary funding solutions for various projects. The team has successfully executed transactions in various sectors, including hospitality, health care, higher education and oil and gas,” he concluded.

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