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Allen & Overy advises Garuda Indonesia on its landmark USD500 million sukuk issuance

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Reksodiputro Harun
Harun Reksodiputro

Partner, Ginting & Reksodiputro in association with Allen & Overy

Jakarta

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11 June 2015

Allen & Overy has advised Indonesian national airline, Garuda Indonesia, on its inaugural USD500m sukuk issuance in the international capital markets. 

This sukuk is the first corporate global sukuk out of Indonesia, the first ever offshore U.S. dollar offering by an Indonesian corporate issuer and the first sukuk issuance utilising the airline capacity structure (as part of a sukuk-al-wakala structure) in Asia.

In preparation for the sukuk issue, Allen & Overy also advised Garuda Indonesia in relation to obtaining a USD400m Shariah-compliant bridge financing facility from the National Bank of Abu Dhabi and Dubai Islamic Bank PJSC., utilising the Sharia concept of Wakala. The Facility used Garuda’s rights to travel (“ASK”) as the underlying asset. The sukuk issue follows a similar Wakala format and also uses ASKs as the underlying asset.

The Allen & Overy team was led by International Capital Markets partner Kenneth Aboud in Singapore and Corporate partner Harun Reksodiputro in Jakarta with support from Louise Hennessey, Raj Sankaran and Bryna Djuhar in Singapore and Marselus Lelyemin and Riandi Apriliansyah in Jakarta.

Commenting, Allen & Overy partner Kenneth Aboud said:  “As the first non-sovereign global sukuk out of Indonesia, Garuda’s issuance is significant in paving the way for other Indonesian corporates to issue sukuk in the international capital markets. This history in the making Islamic finance issuance also marks the first US dollar-denominated sukuk alwakala from an Asian corporate and the first unrated US dollar-denominated sukuk from an Asian issuer. The success of this transaction demonstrates clearly the strength of our Indonesia practice and it highlights our undisputed leadership in global Islamic finance and capital markets. During the course of the last 12 months, we have advised on many of the most high profile and ground-breaking Islamic finance transactions in Asia.   Our clients come to us for innovative and sophisticated Islamic finance solutions.”

Partner Harun Reksodiputro added: “We are very pleased to have the opportunity to advise Garuda on landmark offering, which further spotlights Allen & Overy’s successful Islamic finance practice and strong standing in the Indonesian market. We greatly value our relationship with our client, Garuda, which has become so strong that it has become a partnership where we understand their business well and interact with their business, operational and legal team on a very regular basis. ”

Allen & Overy fields over 25 years of experience in doing Indonesia-related transactions, representing financial institutions, corporates and the Republic of Indonesia on a wide range of transactions. 

Our Asia Pacific Islamic Finance team advises clients on Islamic finance transactions across a number of practice areas, including capital markets, project finance, banking, derivatives and structured finance, funds and taxation.  The Asia Pacific team sits within a premier Global Islamic Finance Group consisting of Islamic finance experts across in the Middle East (Abu Dhabi, Dubai, Qatar and Saudi Arabia) and in Europe (London, Paris and Luxembourg).  

In 2015 Allen & Overy won “Best Law Firm” at the Triple AAA Islamic Finance Awards 2015, and was recognised as the “Law Firm of the Year” for the fourth consecutive year at the annual Islamic Finance News Awards in Dubai.  The awarding body, Islamic Finance News, cited that “Allen & Overy held its ground to retain the top spot by a comfortable margin, and the breadth of expertise and global stretch of the firm as well as its constant focus on new horizons led to its achievement for the fourth year in a row.”

In recent Asia Pacific transactions, Allen & Overy represented the Republic of Indonesia on the update to its US$5 billion sukuk programme and subsequent issue of US$1.5 billion; advised the HKSAR Government on its issue of USD1 billion sukuk due 2020 in the international capital markets, marking the second issue of sukuk by the HKSAR Government (we also advised on their inaugural issuance) and was instructed on the USD2.3 billion equivalent Islamic facility to SapuraKencana Petroleum Berhad, a milestone transaction as the largest syndicated Islamic facility in the Malaysian market to date.

For further information, please contact Alexandra Quilici in Hong Kong, alexandra.quilici@allenovery.com, +852 2974 7065.

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