Sunday, Mar 02, 2008
(This story was originally published on Thursday.)
DUBAI (Zawya Dow Jones)--Islamic bankers are finding it difficult to take positions in the market despite high liquidity among investors due to a lack of Shariah-compliant instruments, bankers said this week.
"Islamic banks are trying to play the same game (as conventional banks), by investing in longer-end sukuks and investing their liquidity with the same prerogative looking at the yield curve but using Islamic structures or products," said Marco Dondi, head of treasury and financial markets at Bahrain's Al Salam Bank.
However, despite high liquidity among Muslim investors, for Islamic bankers "it is much more difficult as the instruments available are much more limited as all interest-related products are forbidden," Dondi added.
According to Afaq Khan, chief executive for Islamic finance at Standard Chartered, investors are now waiting for new Shariah-compliant instruments to be introduced.
"Institutions have closed their books and are willing to park their excess liquidity in the new products that will be placed in the market," Khan said.
Market watchers are seeing growing signs of upcoming debut sovereign Islamic bonds, or sukuks, by the governments of Gulf Arab states such as Qatar and the United Arab Emirates.
The U.K., Indonesia and Hong Kong governments are each set to launch their debut sovereign sukuks by December this year, Khan said.
SUKUK TALK: All previously announced or planned sukuks in the Gulf region will come to the market this year as prospects look good and spreads are expected to narrow, said Afaq Khan. "Nobody has cancelled any issue. Borrowers are waiting for the market to stabilize. Nothing has fundamentally changed ... it's only a change in the timing," he added.
SUKUK TRADING: Activity is picking up on sukuks and bonds in the region. Subordinated debt is still taking the beating, especially in regional firms with structured investment vehicle, or SIV, exposure. Activity is seen picking up on Nakheel 2009s and 2011s (bid 103/ ask 103.5) amid rumors of an initial public offering. Tamweel's convertible is also higher (bid 98/ask 99).
ISSUES CLOSED: No issues were closed this week.
ISSUES ANNOUNCED: Kuwait's Alafco Aviation Lease and Finance Co., or Alafco, will raise $1.1 billion via conventional and Islamic bonds to finance the purchase of 66 aircraft.
ISSUES RUMORED: National Bank Of Abu Dhabi has plans to bring five bond issues, including sukuk, worth up to $3.5 billion to the market this year.
-By Mirna Sleiman, Dow Jones Newswires, +9714 3644966, mirna.sleiman@dowjones.com
Copyright (c) 2008 Dow Jones & Company, Inc.
(END) Dow Jones Newswires
02-03-08 0426GMT
