On June 9th, Calyon was one of the joint lead managers that priced and launched a USD 750 million 5 year SukukIslamic Bond. Similar to an asset backed bond, Sukuk is a form of commercial paper that provides an investor with ownership in an underlying asset, and a return based on this ownership. The issuing entity needs to identify existing assets to sell to the Sukuk investors, via transference to an SPV.
The Sukuk investors then have a proportionate beneficial ownership in these assets. Investors typically take on the credit risk of the issuer rather than real asset risk on the assets owned by the SPV.
Sukuks can be listed and rated, though this is not necessary, depending on the target investor market. Sukuks are typically issued by corporate issuers, and some Financial Institutions, and also by Governments (Bahrain, Malaysia, Pakistan).
Al Ijara A leasing agreement whereby the bank buys an item for a customer and then leases it back over a specific period
issue by the Central Bank of Bahrain. It was issued on behalf of the Kingdom of Bahrain. The deal successfully closed and settled on June 17th, 2009. Calyon had the lead responsibility for coordinating documentation. The Bank also contributed strongly to distribution and has been an active market-maker in the secondary market.

Recent debt capital market issues by GCC (Gulf Cooperation Council) sovereigns have been highly successful, and Bahrain’s issue was no less so. The deal achieved a final order book in excess of USD 4 billion. It was comfortably enabling the Central Bank to increase the size of the deal from an initial target of USD 500 million. The strong over-subscription came despite an aggressive pricing strategy and resulted in a profit rate (coupon) of 6.247%.

This transaction is hugely significant in terms of profile and demonstrable credentials for the Debt & Credit Markets (DCM) and Global Islamic Banking (GISB) franchises in the MENAMiddle East and North Africa region.

This was a repeat mandate for Calyon. In March 2008, Calyon was the sole lead manager of a USD 350 million Sukuk issue by the Central Bank of Bahrain. As was the case last year, Calyon’s responsibilities and activities were jointly managed by the DCM teams in Dubai and London and the GISB team in Bahrain.