Michigan community bank plans US-domiciled Islamic bonds

University Bancorp

19/04/2016 06:40

SYDNEY, April 19 (Reuters) - Michigan-based University Bank, 
a unit of University Bancorp  UNIB.PK , is planning a debut sale 
of Islamic bonds (sukuk), a rare sharia-compliant deal in the 
United States, according to the law firm advising on the 
transaction. 
    The community bank will sell an undisclosed amount of 
perpetual sukuk to raise its Tier 1 capital, paying a maximum 
annual profit rate of 5.75 percent, law firm Linklaters said in 
a statement late on Monday. 
    University Bank specialises in Islamic finance, including 
sharia-compliant mortgages, which follows religious principles 
such as a ban on gambling and outright monetary speculation. 
    The sukuk would be governed under the laws of New York 
state, the statement said. This contrasts with previous sukuk 
issued by U.S. entities, which have opted for offshore 
domiciles. 
    In 2006, Texas-based energy firm East Cameron issued a 
$165.67 million sukuk through a Cayman Islands vehicle. 
    GE Capital, the finance arm of General Electric, tapped the 
market in 2009 with a $500 million sukuk domiciled in Bermuda to 
fund a lease-based aviation deal. 
 
 (Reporting by Bernardo Vizcaino; Editing by Sam Holmes) 
 ((Bernardo.Vizcaino@thomsonreuters.com; Telf: +61293218168; 
Reuters Messaging: 
bernardo.vizcaino.thomsonreuters.com@reuters.net)) 
 
Keywords: ISLAMIC FINANCE/USA