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deals of the year results Saudi Arabia has now emerged as a major Sukuk market, rivaling Malaysia in issuance volume. With these two powerhouses, steady activity in markets like the UAE and Indonesia, and the expansion of Islamic capital markets to new markets like Turkey, 2012 was indeed the most prolific year for Sukuk. Syndications offered solutions to sticky deals requiring restructuring and facilitated key business needs. Advances in Pakistan, new opportunities in Africa and Sri Lanka, and, the consistency of Malaysia and the GCC were additional factors leading to more than 300 nominations in over 25 categories. As a result this was the most competitive Deals of the Year competition ever. The 2012 process was marked by a blend of innovation, replication, and market expansion. During 2012, fewer banks issued bonds in the global markets. But, the Sukuk markets supported both Islamic banking Sukuk issuances and the issuance of Sukuk suitable for Basel III compliance. Banking Sukuk, however important, are not dominant in this year’s Deals of the Year. The sub-categories were as challenging to select as the Deal of the Year. 2012’s volumes showed the resilience of domestic and regional Islamic markets despite trying times in Europe, North America, China and Japan. As before, the Malaysian market provided thought leadership and enhanced execution. Even the Euro-sclerosis could not stop the successful issuance of a landmark German issue. The GCC markets, however, blended recovery with new improvements in products, as well as an intense battle for leadership among the key arrangers. Egypt, Oman, Kenya and many other markets are expected to join the fray this year, and we should anticipate a lucky 2013 bringing a cornucopia of excellent deals and exciting innovations. The most coveted title, the Deal of the Year, was announced during our awards dinner ceremony on the 25 th February, 2013 at the Jumeirah Emirates Hotel, Dubai. Lead manager Legal Counsel for lead manager Legal Counsel for issuer Rating Deal of the Year: General Authority of Civil Aviation SAR15 billion (US$3.99 billion) Sukuk HSBC Saudi Arabia Allen & Overy, Abdulaziz Al-Gasim Law Firm Clifford Chance, Al-Jadaan and Partners Unrated Date Closed 15 th January 2012 Shariah Advisor HSBC Saudi Arabia The General Authority of Civil Aviation (GACA) Sukuk was the first Saudi Arabian transaction to carry the full faith and credit of the Kingdom of Saudi Arabia through a guarantee from the Ministry of Finance. This makes this a rare 0% risk weight asset for bank investors. Although structured as a corporate finance deal for GACA, the transaction finances the renovation and expansion of the King Abdulaziz International Airport in Jeddah. The deal is the largest ever single tranche issuance. The transaction combines a Mudarabah (51% of the proceeds) and commodity Murabahah (49% of the proceeds). The Mudarabah invests in airport operations and participates in landing and operating fees. A second portion of the transaction is a Wakalah generating funds for the project through a long-term Tawarruq transaction which assures investors of their return and provides a fixed obligation from GACA. Honorable Mention for Deal of the Year included Kuwait’s YAAS Sukuk 1; the Abu Dhabi Islamic Bank’s Tier I Sukuk Mudarabah; Brunei Gas Carrier; and the restructuring of Telekom Malaysia’s capital. 34 March 2013
deals of the year results Size Issuer Joint Arrangers Legal Counsel for the Issuer Legal Counsel for the Banks Joint Arranger & Joint Bookrunner Corporate Finance: Majid Al Futtaim Properties US$400 million Sukuk US$400 million Majid Al Futtaim Properties Abu Dhabi Islamic Bank, Dubai Islamic Bank, HSBC Allen & Overy Clifford Chance Standard Chartered Bank Majid Al Futtaim Holding (MAF) through a guaranteed special purpose vehicle, was the first investment grade private issuer to come to market in more than four years. MAF’s special vehicle issued Sukuk al Wakalah which held mall properties on behalf of investors. The deal allowed Majid Al Futtaim to diversify their sources of funding, and secure tight pricing for its London Stock Exchange listed Sukuk. Honorable Mention: Brunei Gas Carrier.; Pakistan Mobile Communication; Lucky Holdings; National Bank of Abu Dhabi; and Jebel Ali Free Zone FZE. Cross Border: Axiata US$1.5 billion multi-currency Sukuk Issuance Program Size US$160.52 million (RMB1 billion)/Inaugural issuance from Axiata’s US$1.5 billion multicurrency Sukuk Issuance Program Issuer Axiata Group Lead Arrangers Bank of America Merrill Lynch, HSBC Amanah Malaysia Joint Lead Arranger, Joint Lead Manager CIMB and Joint Bookrunner Malaysian Law Counsel for the Issuer Zaid Ibrahim & Co Malaysian Law Counsel for the Adnan Sundra & Low Arrangers International Counsel for the Issuer Allen & Overy International Legal Counsel for the Clifford Chance Arrangers With the GCC-Malaysian axis working extremely well, and the London-MENA link at its height, 2012 was one of the most interesting years for cross-border deals. Axiata’s US$1.5 billion multi-currency Sukuk issuance program kicked off with the largest RMBdenominated Sukuk and the second to-date to be issued in the dim sum bond market. The landmark Sukuk issuance program is one of Asia Pacific’s first internationally rated multi-currency Sukuk issuance programs. The Sukuk are listed on Bursa Malaysia Securities (under the Exempt Regime) and the Singapore Stock Exchange The innovative deal is based on an airtime structure. The RMB1 billion (US$160.52 million) Sukuk due in 2014 utilize only airtime vouchers representing the right to use minutes on Axiata’s telecommunications network. Honorable Mention: Abu Dhabi National Energy Company (TAQA); Banque Saudi Fransi US$ issuance; Gulf International Bank; Saudi Electricity Global Sukuk Company; Felda Global Ventures; Brunei Gas Carrier; and WIENCO (Ghana). Real Estate: Sabana REIT SG$80 million (US$65 million) Convertible Sukuk al Ijarah Size US$65 million SG$80 million Issuer Sabana REIT Arranger & Bookrunner Morgan Stanley Asia (Singapore) Co-arrangers Sharjah Islamic Bank Legal Counsel for the Issuer Allen & Gledhill Legal Counsel for the Banks Clifford Chance Real estate was an important asset class for many of the 2012 deals, and Singapore’s Sabana has joined the I-REIT ranks with the three Malaysian pioneers Al Aqar KPJ, Boustead, and Axis. On the one hand, the deal highlights the benefits of the REIT concept to the Islamic capital markets. On the other hand, the convertible Sukuk al Ijarah build on the Ijarah leverage model first applied at Al Aqar KPJ. Honorable Mention: Kings Reach Estate; Emaar Properties; Aldgate Developments Limited Partnerships, and, DIFC Investments. March 2013 35
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