Sukuk Finance

Sukuk represent undivided shares in the ownership of tangible assets relating to particular projects or special investment activity. A Sukuk investor has a common share in the ownership of the assets linked to the investment, although this does not represent a debt owed to the issuer of the bond. Consequently, Sukuk holders are entitled to a share in the revenues generated by the Sukuk assets—the sale of Sukuk relates to the sale of a proportionate share in the assets. Since the beginning of 2000, Sukuk have become important Islamic financial instruments in raising funds for long-term project financing. TaylorDeJongh has recently established a Sukuk practice in order to leverage the company’s energy and infrastructure expertise and to develop Sukuk finance solutions.

This alternative source of capital offers many advantages for oil & gas companies, particularly mid-cap O&G companies. Sukuk can reduce the total cost of financing, provide potential long term tenors, provide financing to projects that might have been neglected by traditional investors, and potentially reduce equity requirements on mid-cap companies.

Sukuk finance also offers a substantial source of capital that is highly competitive in pricing and tenor to asset-backed structured finance to fill the investment gap that exists in infrastructure markets.

TaylorDeJongh and its Principals have executed several landmark deals, including:

  • Advisory on the first LNG financing integrating Islamic, traditional commercial bank and export credit agency financing.
  • One of the largest aluminum smelters in the world, integrating Islamic Finance as one of 5 separate tranches.
  • Financing for operating costs associated with drilling and operating wells for the first U.S. Sukuk backed by oil & gas assets in the Gulf of Mexico and the first Sukuk ever rated by S&P (named as the most innovative Islamic Deal of the Year 2007 by Euromoney).
  • The first securitization Sukuk in Saudi Arabia.
  • The first Islamic securitization out of the GCC (named the 2nd best emerging markets deal of the year by ISR for 2003).
  • The first Revolving Auto Loan ABS in the MENA region.
  • The fist ABCP conduit in the MENA region.
  • The biggest Lebanese term Auto ABS deal.

In addition, Sheikh Yusuf DeLorenzo, Chairman of the Dow Jones Islamic Market Indices, serves on TaylorDeJongh’s Advisory Board.