International law firm Bird & Bird has advised the Islamic Corporation for the Development of the Private Sector (the ICD) on its issuance of the first Kazakhstan Tenge (KZT) denominated sukuk.
The tenge-denominated sukuk ticks off a list of firsts:
- it is the first-ever KZT sukuk in the world;
- the first sukuk in the national currency of one of the Commonwealth of Independent States;
- the first KZT sukuk from an international development institution; and
- has been issued on an amortising basis, which has never been done from a sukuk programme before.
Rated ‘A+’ by Fitch Ratings, the sukuk raised KZT 2 billion and is part of the ICD’s resource mobilisation programme to support the ICD’s line of finance operations in Kazakhstan and to develop the private sector in the country.
The proceeds of the sukuk will be used to finance JSC “Leasing Group” (Leasing Group) whose securities are officially listed on the Kazakhstan Stock Exchange. Together, the ICD and Leasing Group will extend lines of finance to financial institutions and non-banking financial institutions operating in Kazakhstan for the development of the private sector, especially small and medium-sized enterprises.
The issuance of the Tenge-denominated sukuk is in line with the ICD’s strategy to source medium-term funding and create access to local currency finance for private sector expansion, helping to boost economic growth and create jobs.
The sukuk issuance is hailed as a momentous transaction for the Republic of Kazakhstan because it required the coming together of several parties including the National Bank of Kazakhstan, the Kazakhstan Stock Exchange, Tengri Partners (Sole Lead Arranger & Broker), Bird & Bird, Walkers, Kinstellar and the ICD, to put together a structure used for the first time in Kazakhstan, which is intended to raise awareness of Islamic financing and pave the way for others to follow. This Islamic finance milestone also reflects Kazakhstan’s commitment to fostering a robust and inclusive financial sector and follows the announcement that the Islamic Development Bank Institute has formally launched the Islamic Finance Country Assessment exercise in Kazakhstan, with the aim of helping the Republic achieve greater integration of Islamic finance into its mainstream national development agenda.
Eng. Hani Salem Sonbol, Acting Chief Executive Officer, remarked: “We extend our gratitude to our partners, Bird & Bird and Tengri Partners Investment Banking, for their instrumental roles in this landmark transaction. The ICD’s mandate is to support the development of the private sector in our member countries, and this sukuk issuance is a success story that we are all very proud of. It is certainly an additional step towards our objectives and will help to pave the way for creating new jobs and sustainable and balanced growth in our member countries.”
Gregory Man, global head of Islamic Finance and head of the Finance & Financial Regulation practice in the Middle East for Bird & Bird, commented: “Bird & Bird are very pleased to have had the opportunity to work with the ICD once again and to advise on this ground-breaking sukuk issuance suporting one of the world’s most important institutions to continue their mandate to foster the growth and prosperity of the private sector across the Muslim world.”
The team was led by partner Gregory Man with assistance from associates Jessica White and John Angus.
