IslamicFinance.de

Omani real estate developer Tilal Development Co has sold the country's first Islamic bond, a 50 million rial ($130 million) sukuk. Tilal's five-year sukuk, offering a profit rate of 5 percent and based on an ijara structure was privately placed with investors, arranger Al Madina Investment said. About 95 percent of the sukuk, rated BBB+ by Cyprus-based Capital Intelligence, was placed with local investors including pension firms and banks. Tilal, 40 percent-owned by sovereign wealth fund Qatar Investment Authority, will use proceeds from its sukuk to expand the Tilal Complex in Muscat, a flagship project which includes the Muscat Grand Mall as well as residential and office space.

Oman’s first corporate sukuk has received regulatory approval and the five-year, RO50m ($130m) private placement aims to close next month. It will be issued by Tilal Development Co and the proceeds will be used to repay existing debt and expand the Muscat Grand Mall. The sukuk, rated BBB+ by Capital Intelligence, will pay a five percent profit rate and use an ijara structure, a common Shariah-compliant leasing arrangement. Omani domestic investors such as pension funds and insurance firms have expressed interest in the sukuk and it could have a broader regional appeal, in particular from Qatar. A corporate sukuk could also be welcomed by local Islamic banks, which are eager for access to more sharia-compliant investment products while Oman’s Islamic money markets are underdeveloped.