On 9 July 2014, the Luxembourg Parliament has adopted the bill of law 6631 on the sale and buy back of real estate assets compulsory for the issuance of a sovereign Sukuk in an amount of Euro 200 million.
To this end, a Luxembourg SPV will be created and will be fully owned by the Luxembourg State. Such SPV will purchase three main buildings located in Luxembourg and will benefit from a guarantee from the Luxembourg State.
The SPV will issue Sukuk and lease back to the Luxembourg government the underlying real estate assets for a duration of 5 years corresponding to the duration of the Sukuk. The rental income to be received by the SPV, equivalent to the periodic amount to be paid to the Sukuk holders, will be used for such purpose in compliance with Sharia.
The enactment of such law by the Luxembourg legislator demonstrates a strong and clear political will to diversify and develop alternative markets such as Islamic Finance within the financial services industry in the Grand-Duchy.
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