Calyon has been jointly mandated to lead manage a new USD denominated 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).
 for the Kingdom of Bahrain, acting through the Central Bank of Bahrain. This will be the second such mandate for Calyon, following last year’s highly successful and twice over-subscribed issue, on which we were the sole lead.

The fact that Calyon has been mandated again this year is testament to the quality of execution which it delivered last year. Calyon expects this issue to be attractive to investors as the Government of the Kingdom of Bahrain is a rare issuer in the international debt capital markets. Moreover, recent sovereign bond issuance out of the GCC has been very well received by investors globally. This will be the first public Sukuk issue out of the GCC for over a year, since last year’s issue by the Central Bank.

Simon Eedle, Global Head of Islamic Banking noted “The Kingdom of Bahrain remains at the heart of the Islamic banking industry and this issue exemplifies the commitment to the development of this market.  We are delighted to work with the Central Bank on this transaction”.

The issue is rated A by Fitch, and has been given a provisional rating of A by Standard & Poor's, which is the same as the Sovereign rating for the Kingdom of Bahrain. The Sukuk will be listed on the London Stock Exchange and the issue is due to close by mid June. Pricing is yet to be determined.  Road shows will be held in Kuala Lumpur, Singapore, Riyadh and London prior to closing.