Mubasher: Al Rayan Bank-UK, a 68.84% owned by the Qatar-based Masraf Al Rayan, on Wednesday announced that it is on the verge of completing its first ever sukuk issuance through residential mortgage-backed securities.

The total value of the sukuk sale amounts to GBP 250 million ($347.53 million), according to the lender's statement to the Qatar Stock Exchange (QSE).

Upon the sale, Al Rayan UK will be the first bank issuing sukuk outside an Islamic country, and it will be the largest sukuk issuance in sterling by a UK entity, Qatar's second-largest bank by market value added. 

Islamic bond issue of Al Rayan UK aims to diversify its funding sources, as well as pave the way for other Islamic lenders to issue similar sukuk in an effort to encourage Islamic banking in the UK, according to the statement.

Moreover, the book-building was launched with an indicative pricing of 80 basis points over three months, the statement added. 

It is forecast that the bank will increase its financing assets book to more than GBP 2 billion in 2018, up from a current GBP 1.8 billion.  

“The Sukuk certificates will be issued via a special purpose vehicle backed by a portfolio of home purchase plans from clients in England and Wales,” Masraf Al Rayan showed.