May 31 2011
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GCC sukuk roar back
Global sukuk review: May 2011
May 2011 was marked by a comeback of sukuk that are international, USD denominated, listed and GCC originated - a trend expected to persist through June, writes Adnan Halawi, Zawya's fixed income analyst
As much as USD4.9 billion worth of sukuk were issued in May 2011, taking the total issued globally in the first five months of 2011 to an estimated USD37.8 billion, a 62% surge compared to USD14.2 billion during the same period last year, according to data compiled by Zawya Sukuk Monitor.
USD1.2 billion - or 25% of the total - of the sukuk issued in May were out of the GCC, marking a solid comeback for Gulf sukuk.
Based on the success of the issuance, IDB unveiled plans to increase the size of the MTN program to up to USD8 billion and possibly issue the remainder under the current USD3.5 billion before the end of 2011. IDB 's sukuk is the largest corporate sukuk out of the region so far this year.
These issues will help re-energize the sukuk market after a period of relatively low issuance.
Just before the close of May, HSBC Bank Middle East said it sold a five-year USD500 million sukuk under its USD5 billion program that will close officially on June 2 and will be listed on London Stock Exchange as well.
UAE real estate developer
confirmed it is planning to issue AED4.8 billion sukuk by the end of June to pay nearly 60 per cent of its debt as part of overall restructuring involving its separation from the state-owned conglomerate
. Another regular issuer of sukuk,
Saudi Electricty Company
, announced it has picked
for a potential dollar-denominated sukuk issue.
There were some reports in the press that Egypt's Islamists plan to close a budget gap with sukuk - a step that was delayed by the recent political events. Meanwhile, Jordan aims to submit a draft law to parliament in June, paving the way for the sale of sukuk.
Elsewhere, Pakistan sold PKR45.8 billion (USD540 million) Government Ijara Sukuk while Malaysia saw almost USD3 billion in sukuk in May, most of which were under the Central Bank's IDM program with few corporate Islamic papers from regular issuers.
In what would be the first sukuk to originate from the Commonwealth of Independent States, Kazakhstan has reaffirmed its commitment to release a USD500 million sovereign sukuk by the end of 2011.
Thailand's cabinet approved a series of tax incentives proposed by the Ministry of Finance aimed at boosting the development of the country's capital markets whereby capital gains tax and income tax will be waived for both issuers of and investors in sukuk.
Team Leader - Fixed Income
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