Sukuk sales hit $5.3bn in Oct, aided by Gulf

$39bn worth of sukuk issued in the first ten months of the year, investor confidence returning
Sukuk sales hit $5.3bn in Oct, aided by Gulf
A general view shows the Sheikh Zayed mosque, the third largest mosque in the world, located in Abu Dhabi. (Getty Images)
By Joanne Bladd
Wed 03 Nov 2010 12:02 PM

The global Islamic bond market saw issues of $5.3bn in
October as investor confidence returned, aided by major issues from Gulf
states, data from Zawya showed.

A total of $39bn worth of sukuk were issued in the first
ten months of the year, indicating that global investors are keen to dabble in
Islamic bonds, said Zawya analyst Adnan Halawi.

“Sukuk in the
GCC is back on track and the rest of the world is warming up to the benefits of
Islamic bonds,” he said. “October
was marked by diversity of issuing countries with major issues from Qatar,
Saudi Arabia, Malaysia and Indonesia.”

Qatar
Bank issued the largest Islamic bond of the month with a $750m wakala sukuk, which listed on the London Stock Exchange and
marked the emirate’s first corporate issue of the year.

Saudi-based
Islamic Development Bank (IDB) followed suit on October 27 with a five-year
$500m, part of its $3.5bn IMTN sukuk program.

Listed on both
the London Stock Exchange and Bursa Malaysia, 54 percent of the sukuk was allocated
to Middle Eastern investors and 34 percent to Asian investors. The remainder of
the issue was allocated to buyers from Europe.

The month
concluded with Malaysia’s toll-road operator Konsortium Lebuhraya Utara-Timur
(Kesturi) issuing a MYR820m ($365.7m) IMTN sukuk in the domestic market to redeem
an existing sukuk.

Looking ahead in
November and Abu Dhabi Islamic Bank, the emirate's largest Islamic
lender by market value, is expected to issue a $750m sukuk, as part of its $5bn
sukuk programme.

This benchmark sukuk will also be listed on the London
Stock Exchange.

A long-delayed $1bn sukuk from Saudi’s Jubail Refining
and Petrochemical Company is expected to launch in the fourth quarter.

Also from Saudi Arabia, Ahmed Salem Bugshan Group (ASB)
is said to be planning to raise as much as $100m, selling five-year Islamic
bonds to fund projects.

Globally, Australia announced plans to ensure Islamic
finance products are taxed fairly in a bid to attract investors from the Middle
East and Asia, paving the way for sukuk sales.

Jordan's first law covering the issuance of sovereign
Islamic sukuk is being finalized, while Egypt, India, Canada and Australia are also
whispered to join the list of issuing countries.

 “Governments continued to implement
regulatory changes and tax amendments to facilitate the issuance of sukuk on the
one hand, while countries where sukuk are already issued continue to introduce
enhancements to secure a bigger share of the fast-growing Islamic finance
industry,” said Halawi.

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