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Clifford Chance advises HSBC Bank Middle East Limited on an innovative and ground breaking sukuk structure

29 June 2011

Clifford Chance advises HSBC Bank Middle East Limited on an innovative and ground breaking sukuk structure

Clifford Chance recently advised HSBC Bank Middle East Limited (HBME) in connection with updating its US$5 billion sukuk issuance programme and a US$500,000,000 issuance under the Programme. The trust certificates for the issuance, which are due in 2016, yield a profit rate of 3.575% per annum payable on a semi-annual basis.

As part of the update of the Programme, the existing Wakala structure of the programme had to be re-evaluated in light of recent amendments to the UAE's laws. As a consequence, HSBC and Clifford Chance spent a considerable amount of time developing an innovative structure, which utilised Mudaraba and Wakala arrangements, which sought to address the new laws in a manner that complied with the Shari'a requirements of HSBC whilst at the same time being marketable to Islamic investors globally.

The US$500,000,000 sukuk certificates were assigned a rating of A1 by Moody's and AA- by
Fitch and were globally distributed with excellent demand from investors in the Middle East, Asia and Europe.

The Programme Arranger and Dealer was HSBC. The Co-Lead Managers of the US$500,000,000 issuance were Abu Dhabi Islamic Bank PJSC, Al Hilal Bank PJSC, CIMB Bank (L) Limited, Liquidity Management House for Investment Co. K.S.C.C., Qatar Islamic Bank SAQ and HSBC.

Qudeer Latif commented that "We are delighted to be able to support HBME and HSBC Amanah in developing this innovative and ground breaking structure. We expect this Islamic structure to be used by financial institutions both within the Middle East region and further afield moving forward".

Georges Elhedery, co-head of global markets for the Mena region states "As an issuer within
the broader HSBC group we are very focussed on diversification of stable funding. The pricing, size and tenor are all in line with our expectations and form a valuable component of our funding".

The Clifford Chance team was led by Partner and Global Head of Islamic Finance, Qudeer Latif
from Dubai and Partner Andrew Coats from London. They were supported by Partner, Debashis Dey, Counsel, Stuart Ure, Clifford Chance senior associate Robin Balmer, associates Lisa Hagen, Beene Ndulo, Natalia Veryasova and Shauaib Mirza and trainee, Mark Padley.

Mourant Ozannes advised HBME as to Jersey law and Maples and Calder provided Cayman Islands law advice to the Trustee.