IDB to launch US$10bil sukuk

DUBAI: The Islamic Development Bank (IDB) will set up a US$10bil sukuk issuance programme on the Nasdaq Dubai exchange, a boost to Dubai’s efforts to become a top centre for Islamic finance in competition with other cities.

It would be the Jeddah-based IDB’s third sukuk programme – it already issues Islamic bonds in London and Kuala Lumpur – and its first in a Middle Eastern country.

The international lender, which has 56 member countries, promotes economic development in Muslim countries and communities.

In January, Dubai launched a drive to become a centre for Islamic business; its exchanges have so far listed US$12.5bil of sukuk and the total is expected to reach US$16bil by year-end, a statement from the office of Dubai’s ruler said.

No time frame was given for the launch of the IDB’s programme. Its sukuk are highly sought after by Islamic investors because of their AAA credit rating, so they could offer a much-needed boost to trading volumes in Dubai and encourage more issuers from outside the emirate to choose Dubai as their listing venue.

“As the IDB plans a significant expansion of its activities, Dubai’s world class exchange and regulatory architecture together with its commitment to providing Islamic finance solutions of the highest quality make it a natural home for our securities,” IDB president Ahmad Mohamed Ali was quoted as saying in the statement.

The IDB also plans to expand its sukuk programme on the London Stock Exchange this month to US$10bil from the current US$6.5bil. It has issued 15 sukuk in London since 2005.

In addition, the IDB has a RM1bil programme listed on Bursa Malaysia, which has raised a total of RM700mil via three sukuk since 2008.

Dubai’s announcement comes days after Britain unveiled plans to issue a £200mil (US$320mil) sovereign sukuk, the first from a Western country, ramping up efforts to promote itself as an Islamic finance hub.

Prime Minister David Cameron announced the intention during the World Islamic Economic Forum, a major conference for the industry, in London last week; the event will be held in Dubai next year.

(The Star Online / 04 Nov 2013)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Dubai Plans Regulatory Council to Push Islamic Finance Industry

Dubai, the second-biggest member of the United Arab Emirates, plans to create an Islamic finance council to regulate Shariah-compliant equity and fixed-income products to boost the industry’s role in the economy.

Dubai, which derives about 11 percent of economic output from financial services, wants to make Islamic finance a “core industry,” Sami Al Qamzi, director general of Dubai’s Department of Economic Development, said at a conference in the emirate today.

“The addition of Islamic industry is a priority to turn Dubai into the capital for the Islamic economy,” Al Qamzi said. The emirate will seek to encourage the development of a market for Islamic products including funds, sukuk and loans, he said.

Dubai became a regional hub for finance when it opened a financial center in 2004 to attract international banks, asset managers and insurers with promises of a zero-tax environment for 50 years. Global Islamic financial assets may double to as much as $3 trillion by 2015, Standard & Poor’s said in September, prompting governments, companies and banks in the Gulf Cooperation Council to take steps to boost their share in the business.

Shariah-compliant bond sales in the six-nation GCC tripled to $21 billion last year, according to data compiled by Bloomberg, as yields dropped to all-time lows.

(Bloomberg / 09 Jan 2013)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com