Islamic Finance: Senegal Repays 18,156 Billion FCFA of Islamic Debt on July 26, 2019

On July 26, 2019, the State of Senegal will pay the half-yearly margin and partial repayment of its Islamic bond called « SUKUK State of Senegal 6% 2016-2026 » for an amount of 18,156 billion FCFA (27,234 million euros). euros).

On June 20, 2016, the government of Senegal launched a second Sukuk or Islamic bond in the West African Economic and Monetary Union (WAEMU) financial market for CFAF 150 billion ($ 225 million). euros). Instead of a traditional interest rate prohibited by Islamic law, the issuer had set a profit margin of 6% to pay subscribers. The Islamic loan was spread over a period of 10 years, covering the period 2016 – 2026.

The transaction was structured around a common securitization fund (FCTC) which issued 15 million units (Sukuk) with a nominal value of 10,000 FCFA (15 euros) per unit for investors and received in return for liquidity for a total amount of 150 billion FCFA.

The Fund used the proceeds of the issue to purchase the usufruct of the Sukuk Assets that were leased in Senegal, in return for a profit margin of 6% per annum.

The Sukuk Asset consisted of the usufruct of part of the terminal of the former Leopold Sedar Senghor International Airport (now a military airport) which consists of a 115-hectare property tax base. The Sukuk Asset contains the departure and arrival halls, the General Directorate buildings, the car parks, the hangars and the ancillary buildings.

The FCTC’s External Auditor had estimated the value of the Sukuk Asset at CFAF 250 billion, which was more than enough to cover the Islamic loan.

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