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With a Size of BD 200 Million, Commencement of Subscription in the 23rd Issue of the Government Islamic Lease (Ijarah) Sukuk through Bahrain Bourse
Jul 02, 2015
Bahrain Bourse (BHB) announced that as of today, Thursday, 2nd July 2015, and according to the invitation announced by the Central Bank of Bahrain (CBB), Bahraini and non-Bahraini investors can directly subscribe through the primary market in the Government Islamic Lease (Ijarah) Sukuk Issue No. 23 that have been issued by the CBB on behalf of the Government of Bahrain by giving their orders to registered brokers at Bahrain Bourse. Thereafter, investors will be able to trade the Sukuk in the secondary market at BHB once listed on BHB, which is expected to be on 26th July 2015.

The Bourse specified that the subscription period through the registered brokers is effective Thursday 2nd of July 2015 until Tuesday 7th of July 2015.

The BD200 million securities issued at a par value of BD1 each on 9th July 2015 for a period of 10 years ending on 9th July 2025. The expected annual return (rent) on these securities is 5.00%, and will be paid every six months on 9th January and 9th July every year throughout the period of this issue, in which the first return payment will be paid on 9th January 2015 and the last return payment on 9th July 2025.

Islamic lease securities (Ijara Sukuk) are instruments representing assets owned by the Government of Bahrain (Land in Hawrat Unqah). The securities are issued by the Central Bank of Bahrain on behalf of the Government of Bahrain for the purpose of creating new opportunities for the investment of surplus financial resources in the economy and to provide a method of financing the expenditure and needs of various development projects. In issuing these lease securities, the Government of Bahrain sells an asset to the investors who will buy and own it before renting back to the Government at a predetermined rental rate, via a rental contract. The Government will also issue a binding promise to buy back the asset at its par value at the end of the rental period. 

The Government of Bahrain directly guarantees the Islamic lease securities via its binding promise to buy the asset at its original (par) value at maturity. It also guarantees to continue renting the asset according to the rental contract until the end of the rental period. 

One of the main advantages of subscribing through Bahrain Bourse is the ability to own sukuk directly (beneficiary ownership). 

In order to encourage retail investors, the Bourse specified a minimum subscription of 500 BHD (500 sukuk). BHB has also determined a minimum allotment of 10,000 sukuk per subscriber applying for an amount of BHD 10,000 and above, while the remaining quantity will be allocated on pro rata bases.

Upon listing of the sukuk, investors will be able to trade them in the secondary market through a registered broker at BHB during the trading session which is held on a daily basis from Sunday to Thursday.

It is worth mentioning that this is the second subscription in the Government Islamic Lease (Ijarah) Sukuk through Bahrain Bourse, in which the previous subscription (22nd issue) was very successful and was oversubscribed several times.

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