Abu Dhabi and Qatari banks have supported the UK’s first Islamic bond, or sukuk, issuance.

National Bank of Abu Dhabi and Qatar’s Barwa Bank acted as joint lead managers on the £200m ($339.7m) sukuk along with Malaysian bank CIMB and the UK banks Standard Chartered and HSBC.

The UK government confirmed that the bond, which matures on 22 July 2019, has been sold to investors in the UK and other major Islamic finance hubs.

Orders totalled £200m and a wide range of investors from sovereign wealth funds, central banks and domestic and financial institutions are participating in the transaction, according to the UK government.

The issuance is the first sovereign sukuk to be issued by the UK or by any western government.

It forms part of London’s plans to strengthen its reputation as an Islamic finance hub. It will be vying against other finance hubs such as Dubai which is also looking to ramp up activity in its Islamic finance market.  

“Today’s issuance of Britain’s first sovereign Sukuk delivers on the government’s commitment to become the western hub of Islamic finance and is part of our long term economic plan to make Britain the undisputed centre of the global financial system,” said the UK’s chancellor of the Exchequer George Osborne. He added that he hoped to see more sukuk issuance from the UK’s private sector in the future.

The sukuk is structured as an Al-Ijara deal, which means the deal is supported by rental payments on property which provide income to investors. The government sukuk is secured by three central government properties.  The profit rate on the issuance is 2.036 per cent.

HSBC and law firm Linklaters were appointed by treasury as the structuring and legal advisers on the sukuk in January. The government conducted a roadshow around the Middle East, Asia and London from 17 June before launching the sale on 25 June.

The sukuk will be listed on the London Stock Exchange.