Featured teaser:
With sukuk outperforming conventional
bonds in the Gulf, the Islamic bonds market will set new records in 2012,
writes Zawya’s Celine Salloum.
Story page head:
The whole world is turning to Islamic bonds
By
Celine Salloum of Zawya
With
investor demand for Islamic bonds growing, the growth in Islamic finance as an
emerging global financial industry can be attributed to a multitude of factors. These
include a growing global Muslim population, rising oil wealth and the emergence
of multiple new issuers combined with the increase in the global acceptability,
competitiveness and availability of Islamic investment products. Access to a
larger investor universe is seen as a key advantage of structuring Islamic products.
With sukuk continuing to outperform conventional bonds in the
Gulf region in Q2 2012, the Islamic bonds market is set to create new records
in 2012.
“Today, countries all over the
world are turning to Islamic capital markets for financing, and most major
international financial institutions are active in Islamic banking,”
Abdulkareem A. Abu Alnasr, chief executive of Saudi Arabia’s National
Commercial Bank, was quoted as saying in an interview with ‘Arab News’. Experts
estimate that the sukuk market will grow 66% in 2012 to more than USD 44
billion compared to USD 26.5 billion in 2011.
Sukuk issuance in the first quarter of
2012 exceeded all expectations to reach a record USD 43 billion globally, almost
double the average amount of sukuk issued in any given quarter in the past
year, and almost half of the USD 85.5 billion issued during 2011. USD 25 billion
was issued in the second quarter of 2012, making the
first six months of the year the best half-year on record with USD 67.9 billion
sukuk issued, according
to the Zawya Sukuk Quarterly
Bulletin.
Source: Zawya Quarterly Sukuk Bulletin – Q2 2012
In the GCC, sukuk issuance
in Q1 2012 exceeded conventional bonds for the first time. According to Adnan Halawi, content manager at Zawya, “In
the first four months of 2012, Saudi Arabia alone sold a total of USD 6.5
billion of Islamic bonds via five issues. The General Authority for Civil
Aviation’s landmark SAR 15 billion (USD 4 billion) sukuk was sold in January
and marked the beginning of a new age of Islamic bond sales in the kingdom.”
Based on an analysis by Deloitte Middle East Islamic
Finance Knowledge Center, Saudi Arabia’s Islamic finance assets, valued
at USD 94 billion, represent 26% of total GCC Islamic finance assets and 8.2%
of global Islamic finance assets.
“Islamic banking is fast becoming part of the mainstream
financial industry,” Stephen Richards-Evans, regional head of private banking
for Europe, Middle East, Africa and the Americas at Standard Chartered bank,
told ‘Mena FM’ in June. An institution of the
stature of Goldman Sachs announced it would issue USD 2
billion in sukuk, making it one of the first Western banks to do so.
Source: Zawya
Quarterly Sukuk Bulletin – Q2 2012
There is
strong demand for obligations structured according to Islamic principles in a
market which has now reached adequate maturity to accommodate obligors from a
variety of backgrounds, varying by credit quality and geographic location.
Celine Salloum is a research analyst at Zawya.
Comments
Post a Comment