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DEAL ANALYSIS: GE issues first sukuk, just in time
22 December 2009
General Electric Capital Corporation has become the first US corporate to issue an aircraft-based Islamic bond.
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[GE Capital]
[Sukuk]
[Islamic Finance]
[Goldman Sachs]
[Citi]
Talk about timing. After spending a year deciding whether to issue an Islamic bond, General Electric (GE) tapped the market on November 19. Just eight days later Dubai World asked investors if it could defer payment on its $4 billion Nakeel sukuk closing the market.
Although Emirates tapped the sukuk market in 2005, with a deal financing its headquarters, this is the first time that aircraft have been used to back an Islamic bond. It is also the first sukuk by a US company.
The sukuk holders do not take risk on the underlying portfolio but rather they take risk on AA+-rated GE, which will buy back the portfolio at maturity.
Citi and Goldman Sachs were joint bookrunners on the $500 million issue, which was mainly sold to Middle Eastern investors.
Structuring the deal
Gecas had already originated the aircraft leases backing the deal. It transferred the aircraft to Sukuk...
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