The Republic of South Africa has made its inaugural sukuk issue, the first international sukuk issuance from the region. The sukuk was issued through ZAR Sovereign Capital Fund Proprietary (acting as trustee of The RSA Sukuk No. 1 Trust) with an aggregate face amount of US$500 million, having a 5.75 year tenor and a fixed rate profit payment of 3.9% a year.

The sukuk was offered within the US to qualified institutional buyers and to non-US individuals in offshore transactions under Rule 144A and Regulation S, respectively. In keeping with the sovereign's existing conventional securities offerings under its SEC-registered shelf programme, the sukuk is listed on the Luxembourg Stock Exchange.

The Islamic structure underpinning the sukuk involved the sale and leaseback of certain infrastructure assets owned by the Republic, with such assets to be repurchased by the country upon the redemption of the sukuk.

Anzal Mohammed, Allen & Overy's Dubai-based capital markets partner and head of the firm's global Islamic finance practice, commented: "This is a significant transaction for the Republic of South Africa, the development of Islamic finance in Africa and the international Islamic capital markets. With the exception only of the UK, Turkey and the UAE sukuk issuances, the firm has advised on every debut international sovereign sukuk issuance to date globally and this transaction builds on our recent role in advising on the Hong Kong sovereign sukuk. These transactions continue to demonstrate the strength of Allen & Overy's global sovereign capital markets practice."