Mali's debut sale of Islamic bonds to fund social housing

SYDNEY, Feb 14 (Reuters) - The government of Mali will complete its first sale of Islamic bonds, or sukuk, this week using a lease-based structure linked to affordable housing projects, the transaction’s offering document shows.

The West African nation aims to raise 150 billion CFA franc ($285 million) via a seven-year deal that carries a profit rate of 6.25 percent, with subscriptions set to close on Friday.

Mali joins a growing number of African countries in selling sukuk, efforts aimed at developing Islamic finance domestically and tapping demand from Gulf investors.

The sukuk uses a structure known as ijara, a sale and lease-back contract commonly used in Islamic finance, that is underpinned by social housing projects in N’Tabacoro, part of the commune of Kati in the southwest of the country.

Islamic finance operates according to religious principles that include a ban on paying interest and shun outright monetary speculation.

Several governments want to develop the sector as a way to expand financial access and inclusion among Muslim communities, in particular across rural areas.

The sale is being arranged by the Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD), which has advised the governments of Togo, Ivory Coast and Senegal on their own sovereign sukuk.

The sukuk assets are managed by Taiba Titrisation, a Senegal-based subsidiary of the ICD. (Reporting by Bernardo Vizcaino; Editing by Gopakumar Warrier)