Britain becomes first western nation to sell Islamic bond

British government on Wednesday announced that it has sold 200 million pounds (or around 340 million U.S. dollars) of Sukuk, or Islamic bonds, in London.
British first sovereign Sukuk, which is maturing on July 22, 2019, received very strong demand, with orders totaling around 2.3 billion pounds, said the Treasury in a statement.
Britain has become the first non-Muslim sovereign issuer of the debt.
The allocation has been made to a wide range of investors including sovereign wealth funds, central banks and domestic and international financial institutions.
Britain's sovereign Sukuk uses the Al-Ijara structure, the most common structure for sovereign Sukuk, with rental payments on property providing the income for investors, said the Treasury.
The profit rate on the Sukuk has been set at 2.036 percent, which is in line with the yield on gilts, or British government bond of similar maturity, noted the Treasury.
"Today's issue will settle on 2 July 2014, and will be listed on the London Stock Exchange," it said.
George Osborne, the Chancellor of the Exchequer of Britain, said, " 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 center of the global financial system."
British Prime Minister David Cameron last October announced that the government was working to issue British sovereign Sukuk worth around 200 million pounds.
In January this year, HSBC and Linklaters were appointed by British government as structuring and legal advisers respectively, to work with it to issue British sovereign Sukuk in financial year 2014-15.