Treble for Germany as Atlanticlux closes the first tranche of its US$100 million Sukuk - IFN

Treble for Germany as Atlanticlux closes the first tranche of its US$100 million Sukuk

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GLOBAL: After initially coming to the market in August this year and stating its intentions to issue an asset-backed Sukuk which is pegged to Takaful insurance policies, life insurer Atlanticlux (ATL) in its capacity as obligor, has successfully closed the first tranche of its US$100 million Sukuk Wakalah at US$20 million. The issuance, which was said to receive a better-than-expected response from its investors, was amortized at five years with an expected profit rate of 7% a year. This issuance is the third by a German-linked entity, with the first issuance in 2004 by the federal state of Saxony-Anhalt, and the second in 2012 by Munich-based financial services company, FWU Group. FWU has been active in pursuing Islamic finance-related activities over the last few years in particular, positioning itself as a major player in the Takaful market in Europe and on a global scale. In this sense, ATL’s issuance comes as no major surprise to the market, as it is a subsidiary of FWU Group. However, its asset-backed structure is indeed one to be lauded in an industry where asset-backed issuances are still few and far between. Harris Irfan, the managing director at European Islamic Investment Bank (EIIB) – one of the deal’s bookrunners and lead arrangers – commented: “The issuance is asset-backed rather than asset-based, due to its securitization of Takaful insurance policies. This move is in the right direction for the Islamic finance industry by linking the financial economy with the real economy.” The Sukuk was issued via Salam III, a Guernsey-incorporated entity and has been afforded a rating of ‘BBB-’ by Fitch Ratings. According to Markus E Fischer, the chief financial officer at FWU Group, the issuance is expected to further boost FWU’s position in the Islamic capital markets, allowing it to derive new funding sources. The deal is due to be listed and traded on the Channel Islands Stock Exchange (CISX) upon receiving necessary approvals. Law firms Morgan Lewis & Bockius and Bedell Cristin Guernsey Partnership were involved in the deal, alongside Amanie Advisors and Rasmala, which acted as the deal’s co-lead arranger and bookrunner.