Sukuk and debt capital markets: The current cross-border outlook

The transaction, which was also recognised as Ijarah Deal of the Year, reflects the continued use of sophisticated Sukuk structures in the region and the important role of Cayman Islands issuer vehicles in many international Islamic finance transactions.

Walkers’ Dubai-based team, led by partner Ciaran Bohnacker and senior associate Szymon Durlo, regularly advises on Sukuk, debt capital markets and structured finance transactions involving Cayman Islands and other investment hub structures. That work gives the team a broad view of how issuers are currently approaching the market, shaping the below summary.

Issuers are preparing early

A clear trend we are seeing is that issuers are preparing early for future Sukuk and debt capital markets transactions. This includes establishing new programmes, updating existing programmes and settling key transaction documents before a specific issuance date has been confirmed. This approach allows issuers to complete much of the legal and structural work in advance. When an issuance opportunity arises, the issuer can then move more quickly to launch and price the transaction.

From an investment hub perspective, this work often involves establishing or maintaining the relevant issuer vehicle, advising on Cayman Islands law matters, reviewing the programme and issuance documents and ensuring that the vehicle’s corporate approvals and fiduciary arrangements are in place.

For issuers, the practical benefit is timing. A prepared programme can reduce the work required at the launch stage and help the issuer access investor capital efficiently.

Programme updates remain active

We are also seeing a steady number of updates to existing Sukuk and debt issuance programmes.

These updates may involve refreshing disclosure, updating transaction parties, revising programme documentation, renewing regulatory or listing materials or aligning the programme with the issuer’s current funding requirements.

For issuers that already have a programme in place, keeping it current can be an effective way to preserve flexibility. It means the issuer does not need to start from the beginning when it decides to proceed with a new drawdown or issuance.

Private placements continue to be used

In addition to public programme work, we are seeing continued use of private placements.

Private placements can be useful where an issuer is looking to raise capital from a targeted investor base or complete a transaction within a more tailored timetable. These transactions may be structured through standalone issuer vehicles or issued under existing Sukuk or debt issuance programmes.

Outlook

Overall, the regional Sukuk and debt capital markets space remains active. Issuers are continuing to prepare programmes, update existing platforms and use private placements where appropriate.

The current focus is on readiness and execution. Issuers that complete the cross-border structuring and documentation work in advance are better placed to access the market when they decide to proceed.

We look forward to continuing to support issuers, arrangers and transaction parties with the Cayman Islands legal and fiduciary aspects of their Sukuk, structured finance and debt capital markets transactions.