A Resilient Sukuk Market
February sees record issuance of Sukuk. While most sukuk emerged from Asia and by sovereigns and government-related entities, Emaar sukuk and other corporate announcements out of the GCC suggest the debt market is still alive in the region despite political unrest, writes Adnan Halawi
February Issues
USD8.6 billion dollar worth of sukuk were issued globally in February according to data compiled by Zawya Sukuk Monitor, making the month one of the best months on record. The issues came from various issuers but were dominated by sovereign entities or were government guaranteed.
Malaysia had by far the largest share of these issues. On February 25, the government closed its first tranche of the BBA structured Government Investment Issue (GII) for the year selling MYR3.5 billion (USD1.5 billion). Earlier in the month, on February 9, the government had sold the second tranche of the MYR10 billion Ijarah program Sukuk Bank Negara Malaysia Ijarah - SBNMI worth MYR400 million (USD130 million).
Beside the regular weekly sukuk issued under the Bank Negara IDM Sukuk program, three government-related or owned entities issued sizeable sukuk in February. The first came from Pengurusan Aset Air (PAAB) which sold MYR2.7 billion (USD885 million) under a Murabaha program. This was followed by GovCo Holdings Berhad (GHB) which issued a total of MYR3 billion (USD980 million) on February 23, as part of a MYR8.8 billion (USD2.8 billion) Murabaha program. And on February 28, Pembinaan BLT issued a total of MYR1.1 billion (USD360 million) part of MYR10 billion (USD3.29 billion) Musharaka program via Aman Sukuk Berhad.
Sizeable sukuk also came out of neighboring Indonesia in February as the government sold its third series of retail sukuk on February 23 worth IDR7.34 trillion (USD USD820 million). The government also sold IDR6 trillion (USD680 million) sukuk via a private placement for the Haj Fund.
From the Gulf, the Dubai-based real estate developer Emaar Properties sold a USD500 million sukuk on February 3. The sukuk, Emaar's second, is significant in many ways. It is the first corporate sukuk out of the GCC in 2011, the first international sukuk in 2011, and the first corporate sukuk out of Dubai since July 2008; it was listed on London Stock Exchange. The sukuk came at a time when the MENA region is witnessing political unrest which gives hope GCC sukuk would not necessarily be affected by the regional political unrest, especially in Qatar, Saudi Arabia, and UAE.
Source: Zawya Sukuk Monitor www.zawya.com/sukuk
February Announcements
In February, Abu Dhabi's Aldar Properties approved the issuance of mandatory convertible sukuk, debentures and/or bonds convertible into shares in the company in an amount not exceeding AED3.5 billion (USD953 million). Kuwait's First Investment Company (Al Oula) was reported to have finally signed a debt restructuring agreement with creditor banks that includes issuing five-year sukuk worth KWD92 million (USD329 million). Also Qatar's Qatar International Islamic Bank said it plans to issue a benchmark-sized sukuk by mid-year to bolster its loan book ahead of an expected uptick in lending.
-Ends-
Adnan Halawi
Team Leader - Fixed Income
ahalawi@zawya.com
© Press Release 2011
