Vallianz Sukuk Demonstrates Much Needed Cross Border Tapping of Islamic Capital Markets

Vallianz Holdings issuance demonstrates much needed cross border Islamic capital market activity.

The Vallianz sukuk was issued through its Saudi Arabia based Rawabi Vallianz Offshore Services Limited (RVOS) unit of which it is a 50% shareholder. The sukuk issued in Saudi Arabia and denominated in Saudi Riyals for a value of SAR1 billion is a five year issuance and was arranged by a number of Saudi based banks.

Vallianz had announced late last year it intended to refinance using sukuk with the structure involving the transfer by RVOS Vessels for an aggregate consideration of approximately US$410.0 million into a SPV which would then lease back for a term of five years in return for quarterly charter rates to cover financing obligations. Loans were also transferred into the SPV and refinanced.

IILM and Kuwait Finance Issuances

The Malaysian based International Islamic Liquidity Management Corporation (IILM) also issued as part of its regular short-term sukuk issuance programme a $1.34 billion sukuk at a profit rate of 1.038% to mature on 24 May 2016. The sukuk was oversubscribed with total bids received of $1,661 billion.

The Turkey based unit of Kuwait Finance House issued a $350 million sukuk at a profit rate of 7.9%. The Fitch BBB- rated sukuk was issued with a 10 year maturity in order to boost the Turkey based unit’s Tier 2 capital ratio and will be listed on the Irish Stock Exchange.