Norton Rose has bolstered its reputation in the Islamic finance field after advising Indonesia on a $1 billion sukuk issuance, as the country attempts to increase its burgeoning currency reserves and targets the fastest economic growth since the Asian financial crisis of 1998.
The issuance, which closed on Nov. 21, was structured as a sukuk al ijara (sale and lease back) and has a maturity of seven years, with periodic distributions of four per cent per annum, the law firm said in a statement.
The bond issuance is the latest chapter in the recent growth story of Indonesia, which has seen the three main rating agencies upgrade their ratings on the sovereign to just a single notch below investment grade. Reuters says that a promotion to that much sought after rank is expected in the the next 12 to 18 months, with Fitch likely to reassess its rating in the first quarter of 2012. With the economy set to grow by six percent in 2011, foreign exchange reserves will hit $116 billion by the end of the year, and credit growth in 2012 is expected to rise as the economy continues to expand.
This was Indonesia’s second sukuk issuance in three years. In April 2009, it issued its first ever sukuk, with $650 million worth of securities on offer, which closed seven times oversubscribed. Middle East investors took up 30 percent of that, and Asian investors acquired 40 percent.
The Norton Rose team in Asia was led by capital markets partner Ji Liu in Hong Kong and capital markets senior associate Ferzana Haq in Singapore, with assistance from Daniel Kim in Hong Kong and Kirsty Nuttall and Iona Wright in Singapore. Support was also provided by partner Davide Barzilai in Hong Kong and in London, partner Farmida Bi and associate Hamed Afzal.
“We are delighted to be part of a significant transaction which closed so successfully, particularly at a time when the turbulent markets make it difficult for issuers to come to the market. The fact that this transaction priced so well in this tough economic climate is a result of the hard work put in by all parties involved in the transaction,” said Liu in a statement. With the bonds being offered under Rule 144A and Regulation S of the US Securities Act, the firm noted that the deal demonstrated “the firm's expertise in debt capital markets and its US securities law capability.”
The joint bookrunners and joint lead managers for the transaction were Citigroup, HSBC and Standard Chartered Bank, who were represented by Allen & Overy. ALB
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