Oct 05 2010 |
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Global Sukuk Issuance Set To Exceed $30bn This Year
Malaysia was the most active sukuk market in September, but the GCC is expected to see increased activity from October, writes Adnan Halawi.
September Issues
The month of September saw USD4.4 billion of sukuk issuances, compared to USD4.05 billion in September of last year and USD4.46 billion a month earlier. Almost 98% of the sukuk issued in September came out of Malaysia. This is expected to change in October and the following months as benchmark-sized sukuk are expected to be issued out of the GCC and other parts of the world.
Zawya's Sukuk quarterly bulletin for 3Q, 2010 issued on October 1, showed USD27.857 billion were issued in Islamic sukuk globally in the first nine months of 2010, an increase of 62% from the same period last year.
The most significant issues in September came from Malaysia's Celcom Transmission which issued MYR4.4 billion (USD1.36 billion) program in full on September 1. AmIslamic Bank also issued MYR500 (USD177 million), part of its 30-year MYR3 billion Senior Sukuk program on September 20.
On September 7, Padiberas Nasional Berhad (Bernas) issued a MYR400 (USD129 million) million sukuk part of its MYR750 million sukuk program while Pelabuhan Tanjung Pelepas issued a MYR525 million (USD169 million) sukuk part of its MYR1.5 billion Sukuk program.
Source: Zawya Sukuk Monitor www.zawya.com/sukuk
September Announcements
September was significant in terms of announcements that will shape the sukuk markets in the upcoming months.
Qatar Islamic Bank kick-started a global roadshow to sell a benchmark size sukuk on September 24. The deal which is expected to close in early October represents the first corporate issue out of Qatar and only the fifth from the GCC so far this year. It will be listed on the London Stock Exchange, carries a coupon of 3.856% and is rated A by Fitch.
Dubai's real estate company Nakheel announced it has applied to list its upcoming sukuk on Nasdaq Dubai.
The conventional bonds market in the GCC witnessed increased activity toward the end of the month signaling the increased demand for the debt capital market financing by both sovereigns and corporate in the region and renewed confidence. Dubai Government issued a two tranche USD1.25 billion bond. A Few days later, Emaar of the UAE announced the issuance of up to USD500 million convertible notes.
From Saudi Arabia, Arab Petroleum Investments (Apicorp) announced it hired five banks to issue bonds and from Qatar, Qatar Telecom announced it mandated banks for bond sale. From Kuwait, Burgan Bank successfully issued a USD400 million subordinated bond. These issues will help boost sukuk markets in the region.
Regulatory Developments
On a regulatory and legislative level, Thailand's cabinet approved in principle a draft ministerial regulation to allow the issuance of Islamic bonds in the country. The amendment will expand the boundary of securities transactions to allow the issuance of sukuk, the cabinet said in a statement.
Pipeline Issues
Beside Nakheel and Qatar Islamic Bank, significant issues are expected from Saudi Arabia's Islamic Development Bank, Kuwait's First Investment Company and Indonesia's Ministry of Finance to name a few.
Moving forward, sukuk issuance would comfortably top the USD30 billion mark by end of year, and in the best-case scenario could exceed the USD35.5 billion dollars level seen in 2007.
Senior Sukuk Analyst
ahalawi@zawya.com
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