Clifford Chance Oversees the Largest Sukuk Issuance to Date: The UK has now solidified themselves within the magic circle of Islamic finance

September 10, 2021

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2 min read

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What's going on here?

After a strong demand from investors in the Middle East, Asia and the UK, Clifford Chance advises HM Treasury and UK Debt Management Office in relation to the UK launching a second sovereign sukuk of £500 million with a five-year maturity. 

What does this mean?

Sukuk are Sharia law compliant financial tools that can be mirrored as Islamic bonds. There is no inclusion of interest and investors have a direct interest in an underlying sukuk asset, rendering them compliant with Sharia law because they are not debt instruments. Seven years after making history by being the first non-Islamic country to issue sovereign sukuk in 2014, the UK government once again sought to saunter into the international Islamic finance market. This time, the £500m five-year sukuk issuance can be marked as the largest sovereign issuance to date, over double the amount of the £200 million sukuk previously issued. 

Rishi Sunak, the Chancellor of the Exchequer, noted how the strong investor demand for the sukuk meant that the UK “achieved a good price for the taxpayer”, and recognised how this transaction will develop the UK’s relationship with Islamic economies around the world. This move opens the UK up to a wealth of further financial opportunities that are not available to other non-Islamic countries and gives them a head start in dominating international Islamic finance. 

What's the big picture effect?

Through advising the HM Treasury and UK Debt Management Office, Clifford Chance is once again a figurehead in helping the UK cement itself firmly within the Islamic financial landscape. Clifford Chance has been involved in Islamic finance techniques for many years; being led by the Global head of Islamic Finance, Qudeer Latif, the UK was in very safe hands when entering this ground-breaking territory. It is undeniable that Clifford Chance are pioneers in this space and Latif notes how this transaction is one of great importance to the UK as it “seeks to support both Islamic Finance in the UK and wider engagement with the Islamic economies across the world”. 

This is especially notable in light of Brexit, and a time of general financial frustration, allowing us to recognise the commitment that the UK is making to ensure a level playing field between conventional financial instruments and their Islamic equivalents. This transaction solidifies the UK’s position as an international hub for trading beyond Europe, placing them as a global leader in Islamic finance. As a result, the UK can now continue strong financial practices despite their departure from the EU. 

The firm’s involvement here is refreshing because it is clear that they recognise the value of Islamic finance and appreciate their diverse clientele. This transaction allows them to remain one step ahead of their commercial competitors, especially nationally where firms may be restricted by continuing to only deal with Europe and other western countries. CC can pioneer a movement  towards establishing more inclusive, global financial practices.

Report written by Rida Ahmed

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