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Saudi Arabia: Gulf debut for Islamic RMBS

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The Middle East’s debut Shariah-compliant residential mortgage backed securitization is being prepared for the Saudi Arabian market by Unicorn Investment Bank and Standard Bank. The dollar-denominated bond, which should be marketed this month, is the result of more than a year’s work by the joint lead managers. It will be backed by the residential mortgages of a Saudi mortgage company, primarily on properties in Riyadh and Jeddah.

According to Tim Lupprian, head of central and eastern Europe, and Middle East primary markets at Standard Bank in London, although the initial deal is likely to be small, it is the precursor of far larger transactions. “We want to prove that the structure works, as there has been a lot of work to get local laws compatible,” he says.

Enhanced profile

The Shariah-compliant mortgage backed bond “looks and behaves” largely like a conventional RMBS deal, says Lupprian. It does, however, have some advantages. “It has certain features that, in comparison to conventional RMBS, enhance the credit profile,” he says.

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