gif Market Review
Multi Billion Dollar Sukuk on the Cards for Private Sector
Source:
GlobalIslamicFinanceMagazine.com
Growing trade in Islamic bonds in the Gulf region this year could be driven further by increased private sector interest in Sukuk on the back of strong activity by banks, the 51st ACI Financial Markets World Congress will be told in Dubai.
Nick Stadtmiller, Head of Fixed Income Re- search at EmiratesNBD, said over US$6 bil- lion of Sukuk have been sold by GCC entities so far in 2012, compared to a net issuance value of US$7.3bn in 2011, with the UAE’s Majid Al Futtaim Group paving the way for more private sector involvement in Islamic finance through a recent Sukuk sale.
With Islamic financial institutions currently holding Shariah-compliant assets worth an estimated US$1 trillion, he said the global Sukuk market was valued at US$180 bil- lion. “Regional banks have been especially active in tapping the Sukuk market in re- cent months,” said Stadtmiller, who will be among a team of experts analysing the in- tricacies of Sukuk trading at the ACI Finan- cial Markets World Congress, taking place from the 23rd to the 24th of March under the patronage of H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance.
“Another interesting development in the Sukuk market was Majid al Futtaim Group’s US$400 million Sukuk sale in February. MAF’s Sukuk issuance may open the mar- ket to other purely privately owned regional companies.” Stadtmiller said the growth in Sukuk sales in the Gulf region in recent months stems from high demand for the cur- rently limited supply of Islamic bonds, while many financial institutions with good liquid- ity are looking to put money into new invest- ment channels.
“Malaysia is the oldest and largest market for Sukuk, but the GCC (Gulf Cooperation Council) Sukuk market has grown consid- erably in recent years,” he said. “By selling Sukuk, issuers can reach a wider audience of investors, including Islamic institutions that are required to invest in assets that do not pay interest.” Stadtmiller said the ACI Fi- nancial Markets World Congress, at the Du- bai International Convention and Exhibition Centre, is creating an important platform to focus on the “large and growing business” of Islamic finance.
70 Global Islamic Finance April 2012 Many Is- l a m i c institutions, particular-
ly in the Middle East and Southeast Asia, have ample liquidity and are looking to deploy money into new in- vestments
During the ACI Congress, Stadtmiller will take part in a panel discussion on Sukuk trading with Rupesh Hindocha, Head of Credit Trad- ing MEA at Standard Chartered Bank, Yaser Abushaban, Director of Asset Management at Emirates Investment Bank and Chavan Bhogaita, Head of Markets Strategy, Nation- al Bank of Abu Dhabi.
The event will begin on Friday the 23rd, when Brad Bourland, Chief Economist and Head Prop Investments of Jadwa Invest- ments, Farah Foustok, CEO, ING Investment Management and Said Hirsh, Middle East Economist of Capital Economics, will take part in what is expected to be a lively de- bate on the state of the financial markets industry in the wake of the Arab Spring.
The 51st ACI Financial Markets World Con- gress is hosted by the UAE Financial Mar- kets Association, which was established in December 2011 and is an affiliation of the Association Cambiste Internationale (ACI), the global umbrella body of the national financial markets associations around the world.
“Estimates put the total amount of Shariah- compliant assets at Islamic financial institu- tions at US$1 trillion and the global Sukuk market at US$180 billion,” he said. “The ACI World Congress offers an opportunity for in- vestors from around the world to learn about the instruments and players in this impor- tant segment of the global financial market. “Many Islamic institutions, particularly in the Middle East and Southeast Asia, have am- ple liquidity and are looking to deploy money into new investments. Sukuk are a relatively new product, and currently supply of Sukuk is small compared to the potential demand for these assets.
“The supply-demand imbalance in the Su- kuk market means that issuers can place Sukuk among a wide investor base and at- tract competitive pricing on sales. The inves- tor base for Sukuk is more concentrated in the Middle East and Southeast Asia. Sukuk offer regional issuers an avenue to diversify their sources of funding away from Europe and into new geographies.”
Founded in Paris in 1955, the ACI has more than 20,000 members in 80 countries, making it the largest international asso- ciation in the wholesale financial markets industry. “Dubai is a place that cannot be ignored in today’s finance industry,” said Manfred Wiebogen, ACI President. “Reflect- ing on the changed environment in today’s fi- nancial markets, it is very significant that the ACI has come to the GCC region for the first time. We look forward to making a valued contribution to this rising hub between the East (Asia) and the West (Europe and US).” The ACI Financial Markets World Congress is supported by the UAE Central Bank, Official Banking Partner EmiratesNBD, Gold Spon- sor UBS, Silver Sponsor National Bank of Fu- jairah, Strategic Partner Dubai International Financial Centre (DIFC) and Official Media Partner, Bloomberg.
Other sponsors include 360t, 4CAST, ACI In- donesia, ADS Securities, BNP Paribas, Citi, Commerz Bank, Copp Clarke, DDCAP Ltd, Deal Hub, Deutsche Bank, DJ FX Trader, Gain GTX, ICA, ICAP, INTL FCStone, J.P. Morgan, Master Capital Group, MICEX-RTS Group, Saxo Bank, SEB, Standard Bank, Thomson Reuters and Wall Street.
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