Dubai: Real estate lender Tamweel announced on Saturday that its $300 million exchangeable sukuk issue, whose order book was oversubscribed within hours of announcing the launch, has been successfully priced.

The issue was not only successfully priced despite the difficult market conditions but also achieved an all-in sub-Libor funding cost level which makes it the first transaction in the GCC issuance market to achieve such pricing, the company said in a statement.

The sukuk proceeds will be used by Tamweel for its general funding and expansion needs. Subscription for the Sukuk opened on December 13, 2007, and was priced and fully allocated on the same day within hours of the launch.

The Sukuk is expected will carry a sub-Libor profit rate of 4.31 per cent, payable quarterly in arrears, and the exchange price is $2.2711 which represents a premium in excess of 30 per cent over the past three-month volume weighted average market price of the share price.

The price also indicates a premium of 21 per cent to the closing price of the Tamweel shares on 12 December 2007. This Sharia-compliant Sukuk is scheduled to mature in 2013.

Bond details

The sukuk will be issued by Tamweel Funding Limited, a special purpose vehicle established in Jersey, United Kingdom.

Barclays Capital is appointed as the sole lead manager and Bookrunner of the Sukuk.

Adel Al Shirawi, chief executive officer of Tamweel, said: "This sukuk is further evidence of the successful plan that we have put in place and implemented to diversify and further strengthen our funding sources. This success comes in the midst of troubled markets, which is evidence of investor confidence in Tamweel, its strategies and management team, and a reflection to our strong and stable growth.

Proceeds will fuel our mortgage finance business in the UAE and the wider region and lead to stronger growth than that has led us to surpass our full-year earnings target in 2007."

Under the terms of the sukuk, the holders will have the right to exchange the sukuk into shares or, at the option of the issuer, a cash-equivalent amount. The issue price will be set at 100 per cent of the initial aggregate face amount of the sukuk and, unless previously redeemed, the sukuk will be redeemed at par on maturity.