Nomura Holdings intends to issue a US$100m two-year sukuk. The bank has appointed Kuwait Finance House (Malaysia) Berhad (KFHMB) as the mandated lead arranger, while S&P has assigned the issuance a preliminary rating of triple-B plus.

"This issuance is part of Nomura's ongoing push to diversify its funding sources to drive growth. Islamic investors and Islamic finance are a very important and rapidly growing sector globally and this transaction is highly significant for Nomura and for corporate Japan," says Takumi Shibata, Nomura Holdings deputy president and coo.

He adds: "Nomura has now opened the way for other Japanese corporations to tap the Islamic finance market and we believe that the transaction will lead to significant benefits for Nomura and for our clients and partners."

The sukuk's assets primarily consist of ownership interests in aircraft assets and rights under the associated lease agreements. NBB Ijarah (NBBI), the special purpose company, will sell its legal interests in two aircraft assets to the trustee and act as servicing agent for the transaction. Nomura will unconditionally guarantee all of NBBI's obligations to the trustee.

"Nomura's guarantee will rank pari passu with the company's other senior unsecured obligations and underpins our equalisation of the rating on the certificates with our long-term counterparty credit rating on Nomura," says Allan Redimerio, S&P credit analyst.

Only two aircraft are involved in the proposed transaction, making the possibility of total loss relevant. Should total loss occur, any shortfall between the required insurance coverage amount and actual insurance proceeds will be the obligation of NBBI and thus come under Nomura's guarantee.

"Other factors that partly mitigate the small number of assets in the transaction include the ability of the transaction to replace a damaged aircraft and the short tenor of the transaction," Redimerio adds.