Norton Rose Fulbright advises on US$1bn first-of-a-kind cross-border Islamic financing

Middle East Press release - Business April 2020

Global firm Norton Rose Fulbright has advised HSBC and Mizuho Bank on a Shariah-compliant US$1bn Islamic finance facility, the first cross-border transaction of its kind to conform to new regulations set by the UAE Central Bank.

As part of changes to commodity murabaha financing structures, certain Islamic Banks and Islamic Windows need to comply with the regulations (Shariah standards) set by Islamic finance body the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) issued on 29 December 2018.

The US$1bn AAOIFI-compliant transaction was set up as a dual tranche facility to enable a wide range of banks to participate: banks that are required to adopt the AAOIFI structure, as well as those banks that were happy with the existing murabaha structure. This approach meant that the book runners were able to maximise liquidity in an increasingly tight market by providing the greatest level of flexibility to participants.

Norton Rose Fulbright’s Dubai-based banking team acted for the initial mandated lead arrangers, book runners and coordinators. The team consisted of Mohammed Paracha, partner and Middle East head of Islamic finance at Norton Rose Fulbright, senior associate Seya Rahnema and counsel Shauaib Mirza.

Mohammed commented:

“The change in approach to commodity murabaha financing structures introduced by the UAE Central Bank required a fresh process for how commodity murabahas – a type of Islamic facility used where a user of funds does not have a specific asset to base the structure on – are structured.

“We are proud to have been chosen to lead the banks on this ground-breaking transaction. It has been successfully delivered within a short time frame, alongside the challenges created by COVID-19, which required a flexible and innovative approach to overcome, and is truly a precedent-setting transaction.”

Norton Rose Fulbright’s global Islamic finance lawyers have long-standing experience in delivering pioneering legal advice on Islamic finance transactions for Islamic financial institutions, conventional banks and corporates. The award-winning team is regularly recognised by industry bodies, and publications such as Islamic Finance News, and is highly ranked by both Chambers and The Legal 500 for knowledge and experience.

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