Tuesday, Mar 06, 2012
DUBAI (Zawya Dow Jones)--HSBC Amanah, the Islamic financial services arm of HSBC, expects about $14 billion worth of Islamic bond, or sukuk, sales from the Middle East and North Africa this year as debt capital market activity picks up globally.
Already in January, companies and governments in the Middle East sold $5.7 billion in sukuk, according to data from Dealogic. Sukuk sales tailed off last month, but HSBC Amanah executives said at a media roundtable Tuesday that strong investor appetite and the need for financing for large infrastructure projects should drive a year of growth.
"Within the context of the U.A.E. already we've seen somewhere close to around $1.7 billion already, so I think there's still a lot more to come out of the U.A.E," said Mohammed Dawood, HSBC Amanah's managing director of Islamic global markets for the EMEA region. "We think the U.A.E. overall issuance will be somewhere between $4 to $5 billion [this year]."
Among the biggest sukuk sales so far this year in the Arab Gulf was a SAR15 billion issue by Saudi's General Authority of Civil Aviation in January and a pair of $500 million issues by Dubai's Emirates Islamic Bank and Abu Dhabi's First Gulf Bank the same month.
Globally, HSBC Amanah expects sukuk issuance to reach $44 billion in 2012, up from $26.5 billion last year. The bank is predicting that 60% of sales will come from Malaysia, a long-established hub for Islamic finance. A further 32% of the total is to come from the Middle East and North Africa and 8% is expected from other countries.
Sukuk are financial instruments that behave like bonds but comply with Islamic law's prohibition on paying or receiving interest.
-By Asa Fitch, Dow Jones Newswires, +971 4 446-1685, asa.fitch@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
06-03-12 1314GMT
