Egyptian marine services firm Maridive and Oil Services has obtained a $150 million syndicated loan using an ijara (Islamic leasing) structure, the first of its kind in Egypt, the legal advisor on the deal said on Wednesday.
The Maridive loan is considered one of the largest in the country's challenging banking sector, according to law firm Crowell & Moring which advised on the transaction.
The deal could give assurance to the market that ijara is applicable in Egypt, encouraging firms to use it for other types of transactions including sukuk, or Islamic bonds, a growing funding source for both corporate and sovereign issuers.
Egypt's Islamist-led government is keen to develop Islamic finance and earlier this month President Mohamed Mursi approved a law allowing the state to issue sukuk.
An earlier draft of that law triggered a dispute with Al-Azhar University, the country's top religious authority, casting doubts over which Islamic instruments would be allowed.
The government hopes the law will allow it to tap billions from the Islamic bond market and bolster state finances which have deteriorated in the two years since an uprising ousted President Hosni Mubarak.
Egypt is also trying to secure a $4.8 billion loan from the International Monetary Fund to support its ailing economy.
Islamic finance contracts such as ijara must abide by religious principles such as a ban on interest and pure monetary speculation.
In an ijara one party leases a specific asset to a client for an agreed rental price, but unlike an operating lease a lessor cannot charge interest on defaulted or delayed payments.
In addition, in an ijara the cost of acquiring the asset is usually not amortized during the leasing period, the lessor must own the assets for the full lease period and be responsible for bearing the maintenance costs of the asset.
Abu Dhabi Islamic Bank Egypt, the Egyptian unit of Abu Dhabi Islamic Bank, was lead arranger and global coordinator for the deal, which also included ADIB, Arab African International Bank, Banque du Caire and Arab International Bank.