LONDON — Al Rayan Bank, the UK's largest Islamic bank* and one of the fastest growing banks in the country, has become the first bank in the world to issue a public Sukuk (Islamic bond) in a non-Muslim country, reinforcing the UK's position as the western hub for Islamic finance. The transaction is priced at Sterling 3 months' LIBOR plus 80bps.

Tolkien Funding Sukuk No.1 Plc (Tolkien Sukuk) is Al Rayan Bank's inaugural securitisation of residential finance backed security (a Sharia compliant alternative to a conventional RMBS^). The transaction is secured by a portfolio of prime UK, first-charge, owner-occupied, Home Purchase Plans (HPPs) originated by Al Rayan Bank. The £250 million Sterling-denominated Sukuk has an expected called weighted average life of 3 years. The securitization of residential assets is provisionally rated AAA by Standard & Poor's (S&P) and Aaa by Moody's Investors Service (Moody's).

Al Rayan Bank's Tolkien Sukuk is the largest ever Sterling denominated Sukuk issued by a UK entity, following the UK Government's £200m Sukuk, which was issued in 2014. Tolkien Sukuk was oversubscribed with final demand at 155% of book, reflecting the strong demand for Islamic financing instruments that exists in the market, and the fact that the UK is well positioned to become the destination of Sukuk issuance for Western Europe.