Al Baraka plans up to $500m sukuk in Q1 2011

Bahraini Islamic lender Al Baraka will issue up to $500 million in Islamic bonds in the first quarter of 2011, its chief executive said on Thursday.

On the sidelines of a banking conference in Beirut, Adnan Yousif told Reuters: "We will issue sukuk in 2011 for the group in Bahrain between $200 and $500 million."

He added: "It is a medium term sukuk for five years and it will help financial institutions to attract new clients to take part in these sukuk."

Sukuk bonds are a flagship product of the Islamic finance industry. Analysts say the Gulf based Islamic bond market is poised for revival as large corporate and supra national issues come to market.

Since August, the region has seen offerings as varied as Kuveyt Turk's three year $100 million Islamic bond, the first sukuk out of secular Turkey to Qatar Islamic Bank's $750 million sukuk, which market insiders say was a runaway success.

The sukuk market is also awaiting Al Baraka's $200 million sukuk by the end of the year and more from Jordan and Turkey.

Yousif said his bank was still interested in the Asian market and he planned to go to Indonesia and Malaysia in December to meet banks there.

The merger of the bank's Pakistani unit operations with Emirates Global Islamic Bank was finalised at the end of last month, and the new entity has begun operating under the name of Al Baraka Bank Pakistan Limited.

He said: "(The merger in) Pakistan has been achieved, and the money has also been transferred. Now we are heading to Indonesia and then Malaysia. But Indonesia comes first."

Indonesia is becoming an increasingly attractive market for Islamic finance since the government took steps to change laws to accommodate the nearly 1 trillion dollar industry.

However, al Baraka's plan to buy a stake in the Malaysian Bank Muamalat has been called off.  Yousif said: "The Malaysian side has changed its mind, so we will look for other opportunities, We have other alternatives. The Muamalat for the time being is off."

He also said his group was interested in the Dubai market and was considering taking part in Dubai's planned $1.5 billion sovereign sukuk in Malaysia, the world's largest Islamic bond market.

Yousif said 2010 profit for the Al Baraka Banking Group, which has units and representative offices in 12 countries, with more than 300 branches, would be around $200 million, a 20 percent increase from last year. (Reuters)