Dubai financial centre to sell sukuk

The Dubai International Financial Centre (DIFC) plans to sell Islamic bonds and has hired Deutsche Bank and Goldman Sachs to arrange the issue, a Deutsche Bank official said on Sunday.

The DIFC is planning to sell at least $1 billion of the bonds that comply with an Islamic ban on the receipt of interest, a source familiar with the deal said. The person, speaking to Reuters in the Bahraini capital, Manama, declined to give further details.

The DIFC will invite investors to presentations starting in the Malaysian capital, Kuala Lumpur, on Monday and to June 5, Geert Bossuyt, head of Middle East structure at Deutsche Bank told Reuters.

He declined to say how much the DIFC, which the government of Dubai established to build a financial services hub in the Gulf Arab emirate, was selling.

Islamic bonds do not pay interest, which is banned as usury under Islamic law, and are structured as profit-sharing or rental agreements underpinned by physical assets. Islamic finance caters to growing demand among the world's 1.2 billion Muslims for investments that comply with their law.

The DIFC, a dollar-based investment zone in the Gulf region's commercial hub, is bringing together investment banks to act as market-makers for Islamic bonds, or sukuk, listed on its new bourse, the Dubai International Financial Exchange.

Khalid Yousaf, director of Islamic finance at the DIFC, said in September the DIFC was expecting global sukuk issuance to top $100 billion in five years, compared with around $13 billion at the time.

Much of the growth will be driven by issuers based in Gulf oil exporters.

DIFC Investments, a unit of Dubai International Financial Centre, bought a 2.2% stake in Deutsche Bank this month.

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