Goldman learns lessons and prospers

Lloyd Fonzie Blankfein

Three years after its first foray into the Islamic capital markets ended without a sale, investors piled in to buy sukuk debt from Goldman Sachs on Monday, as the bank joined the governments of Hong Kong and the U.K. in selling debut Shariah-compliant bonds this year.

Bloomberg News reports that Goldman attracted bids for three times the $500 million of sukuk it sold on Monday, according to two people familiar with the deal, who asked not to be identified because the information is private. The five-year sukuk was priced to yield 90 basis points, or 0.9 percentage point, over the benchmark midswap rate, according to the people.

After failing to sell sukuk bonds in 2011 amid criticism the deal didn’t ensure debt would be traded at par, as required by Islamic law, Goldman adjusted the structure this time in a bid to appeal to more investors. The new issue is a Sukuk al Wakala, a Shariah-compliant format in which one party entrusts another to act on its behalf.

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