An upcoming sukuk backed by properties in the Gulf region is the first RMBS from the region since 2007, according to a source close to the deal.

The transaction would appear to be a true asset-backed sukuk, as opposed to an asset-based one. In the latter, investors do not have recourse to the collateral. The overwhelming majority of outstanding sukuks are asset-based.

The transaction is currently sized at $235 million and carries a preliminary ‘Aa3 (sf)’ from Moody’s Investors Service. The arrangers of the deal are Abu Dhabi Commercial Bank, Emirates NBD, and UBS, according to a number of news reports.  

The pool consists of “Ijara” (lease-to-buy) contracts denominated in United Arab Emirates Dirhams (AED).

The deal has a dual SPV structure “whereby Tamweel will pass the legal title, assign the lease rental and all the associated rights and receivables arising from or related to the properties to Tamweel Residential RMBS IV, a special purpose company incorporated in the Dubai International Financial Centre based in the UAE,” Moody’s said in a release.

Over 99% of the leases in the pool carry a variable interest rate, and the weighted average of all leases must be equal to or above 5.5% as spelled out in the structure documents.

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