Project sukuk first sets intercreditor precedent

Author: Gemma Varriale | Published: 14 Nov 2011
The first sharia-compliant greenfield project bond combined a sukuk with international-standard project bond intercreditor techniques to allow the landmark accession of the sukuk to the wider financing market.

The strategically important bond was a comparatively small part of the total debt in the $14 billion (£8.8 billion) Jubail project in Saudi Arabia. According to lawyers on the deal, a key challenge was integrating the sukuk structure with multi-source conventional financing arrangements and negotiating sukuk accession criteria to preserve the pari passu position of senior debt.

"A major difficulty was not only creating a sharia-compliant bond, but also making sure that...