BMA’s BD30 million Ijara sukuk issue oversubscribed

A BD30 million (US$79.5 million) issue of Ijara sukuk (Islamic leasing bonds, placed by the Bahrain Monetary Agency (BMA), has been oversubscribed by more than 50%.

Subscriptions worth BD45.5 million were received for the 5-year issue, which commences on 28th February 2005 and matures on 28th February 2010. The issue carries a fixed rental return of 4.5% per annum, which is payable twice yearly on 28th August and 28th February each year.

This is the 11th Ijara sukuk to be issued by the BMA. It brings to a total of US$1.21 billion the value of Ijara sukuk issued by the BMA, of which US$1.14 billion is currently outstanding. “We are gratified by the response to BMA’s Ijara sukuk series, which has been very well received by the market,” said Mr. Waleed Abdulla Rashdan, Executive Director, Banking Operations, at the BMA.

Subscribers to the latest issue were mainly conventional commercial banks, pension funds and insurance companies. The sukuk are being issued upon maturity of a US$70 million Ijara sukuk issue, which has matured on the 27th of February 2005. The 3-year sukuk, which was issued on 27th February 2002, is the first to mature in BMA’s Ijara sukuk series, which began in September 2001.

The latest issue is the second BD-denominated sukuk to be issued by the BMA. The first BD-denominated issue, which was the 10th issue in BMA’s Ijara series, was BMA’s, as well as the global Islamic banking industry’s, longest tenor sukuk, having a maturity period of 10 years. The BD40 million (about US$106m) sukuk was issued on 20th July 2004 and will mature on 20th July 2014. The rental return on the fixed rate note is 5.125%.

The sukuk will soon be listed on the Bahrain Stock Exchange (BSE).

The Ijara sukuk are issued by the BMA on behalf of the Government of Bahrain, which enjoys a local currency rating of A from international rating agencies, Standard & Poor’s (S&P) and Fitch.