The Bahrain Monetary Agency (BMA) is issuing Ijara sukuk (Islamic leasing bonds) worth BD30 million. The 5-year issue 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 will bring to a total of US$1.21 billion the value of Ijara sukuk issued by the BMA.
“BMA is pleased to continue its Ijara sukuk series, which has been very well received by the market,” said Mr. Waleed Abdulla Rashdan, Executive Director, Banking Operations, at the BMA.
Minimum subscription has been set at BD10,000. Subscriptions for the issue will be received by the BMA until 21st February 2005. All commercial banks and insurance companies operating in Bahrain are allowed to subscribe. Individual and institutional investors can subscribe through the participating institutions.
The upcoming sukuk is being issued upon maturity of a US$70 million Ijara sukuk issue, which is maturing on 27th 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 upcoming 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%.
“Most of our Ijara sukuk offerings have been denominated in US dollars. However, we want to create a local currency yield curve, which could serve as a benchmark for other potential issuers,” said Mr. Rashdan.
The sukuk will 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.