Islamic Finance

UK issues sophomore sovereign sukuk more than double the size of debut

The government of the United Kingdom on Thursday (March 25) sold its second-ever sukuk that was more than double the size of its debut offering in 2014. 

HM Treasury said in a statement on Thursday the profit rate for the five-year £500 million sukuk was set at 0.333%, flat to the yield on the existing 1.5% gilt due July 2026.

The ijarah sukuk is based on rental income from central government office properties.

HM Treasury said the sale attracted orders of £625 million, with strong demand from investors in the Middle East, Asia and the UK.

The UK’s debut sovereign sukuk consisted of a five-year £200 million ijarah paper that offered a profit rate of 2.036% in line with the yields on gilts (British government bonds) of a similar maturity.

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