Jan 04 2011
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Global Sukuk Markets - December in Review
Most issuers postpone their sukuk plans to the new year, while second tranches of existing programs close in December, writes Adnan Halawi
The Government of Pakistan issued the second tranche of its Government of Pakistan Ijarah Sukuk (GIS) for the year, raising PKR31.37 billion ($360 million) following a similar issuance in November. From the UAE, National Bank of Abu Dhabi issued the second MYR 500 million ($160 million) tranche under its MYR 1.5 billion ($485 million) program. With a tenor of 10 years, the second tranche pays 4.9% and follows a similar issuance by the bank in June.
Bank Negara Malaysia, Cagamas, TH Plantations, and Al-Aqar Capital - all out of Malaysia - were the other regular issuers that continued to issue tranches of their existing Sukuk programs. The year closed with Malaysia's Senai-Desaru Expressway Berhad fully issuing two Sukuk programs totaling MYR5.58 billion ($1.8 billion) on December 31.
On a regulatory level, the sukuk industry was dealt a severe blow in December when the South Korean National Assembly rejected a finance bill which would have placed alternative financial products, such as sukuk, on an equal footing with conventional bonds. Although the National Assembly did not offer any clear reason for their decision, it was reportedly done on political and religious grounds.
In The Pipeline
In January, the Sukuk market may witness the issuance of Sukuk by Nakheel . The fourth Sukuk by the company could well be of benchmark size and expected to be used to repay part of the company's existing debt. It would also signal renewed confidence in the debt markets from the company which had trouble honoring its benchmark $3.5 billion sukuk.
Bank Nagari of Indonesia is pushing ahead with its planned Sukuk and has announced it will be open for subscription on January 4. This would mark the first corporate issuance out of Indonesia since June 2010.
Yemen is also whispered to be planning to raise $500 million from the sale of Islamic bonds next year in its first such an issuance.
Meanwhile, GE's president for the Middle East and Africa GE Capital's CEO has reiterated that it may tap the Islamic bond market again in "the near future" after the company in 2010 became the first U.S. corporate to issue a Sukuk.
Kuwait's Gulf Investment Corporation is also rumoured to be looking to start a Malaysian Sukuk program in January 2011.
Last year was a mixed bag for sukuk, but will 2011 be a happier year for the industry?
Senior Sukuk Analyst
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