The value of Islamic bonds issued globally from January to July 2013 slipped to USD 65 billion compared with USD 81 billion in the same period last year. However, the number of sukuk programs and tranches that were issued so far this year were relatively higher at 442 as against 417 in 2012, according to Zawya's Global Sukuk Monitor data.
The drop could be attributed to exceptionally large issues that took place in 2013, namely that of Saudi's General Authority for Civil Aviation (USD4 billion) and Malaysia's PLUS (USD10 billion), which made it hard to beat last year's levels even with a greater number of issues.
Add to that, the Holy Month of Ramadan started early this year, pushing some issuers to sell their sukuk in September, which could help markets recover and even post more bullish performance in the last quarter of 2013.
In that respect, 2013 has so far been as good as 2012 after it witnessed robust sales from Saudi Arabia, which helped the kingdom trail behind Malaysia in terms of market share both in size of sukuk issued and outstanding sukuk market.
SAUDI TRANSFORMS SUKUK LANDSCAPE
Recent developments, however, highlight Saudi Arabia's growing presence in the global Islamic bond market. The kingdom is not just a mere financial hub entering the market, but one of the largest Muslim economies in the world with insurmountable potential buoyed by its huge economic development program and long list of projects pipeline.
In addition, the oil-rich nation's clout spans some of the world's most influential agencies from the Organization of the Islamic Conference (OIC) to the Organization of the Oil Exporting Countries (OPEC), and almost every politically-, economically- and Shariah-related sectors.
Because of its financial weight, Saudi Arabia was able to make up for the slowdown experienced by the MENA sukuk market following the Arab Spring. It will be interesting to note that should countries like Egypt, Morocco, Tunisia and Oman start using sukuk as a means to access capital, MENA could rival Southeast Asia (SEA), which currently dominates the global sukuk scene. A bullish MENA sukuk will also diversify a market that is historically controlled by GCC and SEA players.
In the first seven months of 2013, Saudi Arabia sold USD8.2 billion of sukuk through 13 deals, followed by the UAE with USD5.16 billion from nine deals.
PLAYING FIELD WIDENS
Interesting deals that closed in July included Singapore-based Swiber's SGD150 million sukuk, which opened the possibility for Singapore to play a key role in SEA besides Malaysia and Indonesia, as well as other Asian countries like Pakistan. Singapore also attracted investors from neighboring Brunei, which should encourage issuers from this other SEA nation to sell sukuk.
Meanwhile, Saudi Binladin Group's sukuk is an example of a construction company in the MENA region that continues to sell short-term sukuk every year - a unique model from the Middle East region.Dubai is also bidding to become the world's Islamic economy and sukuk capital - an objective that will nevertheless be associated with a couple of issues that help aid the city's dream.
Surprises in the remaining four to five months of the year are still possible and all eyes are on new markets planning to enter the sukuk industry. While Muslims and Islamic capital markets experienced a relatively dormant July-August Ramadan and Eid break, governments and companies from different countries announced or have indicated that they are actively working on, or considering selling sukuk.
Saudi Arabia's GACA is reportedly considering selling a second huge tranche under its sukuk program, and talkshave emerged on the Saudi transport's plan to use sukuk to finance its multi-billion dollar project.
Luxembourg-based ATLANTICLUX Lebensversicherung announced its USD100 million Salam III sukuk via a Fitch rating press release on August 9. This is the first surprise. We still await Oman's Tilal to announce plans to close its first Omani sukuk deal. In Egypt, once the political conflict has been resolved, authorities are eyeing to sell the nation's first sovereign sukuk. Other issuers could be Saudi's Almarai and Bahri, IILM short-termed sukuk, Bahrain's Al Baraka, Dubai's DMCC and Dubai Investments Park.
For more in-depth analysis on select sukuk deals and trends, discussions and findings, and exclusive content, please join the Islamic Finance Gateway Community, where you can receive daily and weekly briefings or invitations to focus sessions and events.
Adnan Halawi is product manager at Zawya Islamic Finance and can be reached atadnan.halawi@thomsonreuters.com
http://www.zawya.com/story/Sukuk_value_down_as_volumes_rise-ZAWYA20130813080534/?utm_source=zawya&utm_medium=web&utm_content=editors-pick&utm_campaign=story
The drop could be attributed to exceptionally large issues that took place in 2013, namely that of Saudi's General Authority for Civil Aviation (USD4 billion) and Malaysia's PLUS (USD10 billion), which made it hard to beat last year's levels even with a greater number of issues.
Add to that, the Holy Month of Ramadan started early this year, pushing some issuers to sell their sukuk in September, which could help markets recover and even post more bullish performance in the last quarter of 2013.
In that respect, 2013 has so far been as good as 2012 after it witnessed robust sales from Saudi Arabia, which helped the kingdom trail behind Malaysia in terms of market share both in size of sukuk issued and outstanding sukuk market.
SAUDI TRANSFORMS SUKUK LANDSCAPE
Recent developments, however, highlight Saudi Arabia's growing presence in the global Islamic bond market. The kingdom is not just a mere financial hub entering the market, but one of the largest Muslim economies in the world with insurmountable potential buoyed by its huge economic development program and long list of projects pipeline.
In addition, the oil-rich nation's clout spans some of the world's most influential agencies from the Organization of the Islamic Conference (OIC) to the Organization of the Oil Exporting Countries (OPEC), and almost every politically-, economically- and Shariah-related sectors.
Because of its financial weight, Saudi Arabia was able to make up for the slowdown experienced by the MENA sukuk market following the Arab Spring. It will be interesting to note that should countries like Egypt, Morocco, Tunisia and Oman start using sukuk as a means to access capital, MENA could rival Southeast Asia (SEA), which currently dominates the global sukuk scene. A bullish MENA sukuk will also diversify a market that is historically controlled by GCC and SEA players.
In the first seven months of 2013, Saudi Arabia sold USD8.2 billion of sukuk through 13 deals, followed by the UAE with USD5.16 billion from nine deals.
PLAYING FIELD WIDENS
Interesting deals that closed in July included Singapore-based Swiber's SGD150 million sukuk, which opened the possibility for Singapore to play a key role in SEA besides Malaysia and Indonesia, as well as other Asian countries like Pakistan. Singapore also attracted investors from neighboring Brunei, which should encourage issuers from this other SEA nation to sell sukuk.
Meanwhile, Saudi Binladin Group's sukuk is an example of a construction company in the MENA region that continues to sell short-term sukuk every year - a unique model from the Middle East region.Dubai is also bidding to become the world's Islamic economy and sukuk capital - an objective that will nevertheless be associated with a couple of issues that help aid the city's dream.
Surprises in the remaining four to five months of the year are still possible and all eyes are on new markets planning to enter the sukuk industry. While Muslims and Islamic capital markets experienced a relatively dormant July-August Ramadan and Eid break, governments and companies from different countries announced or have indicated that they are actively working on, or considering selling sukuk.
Saudi Arabia's GACA is reportedly considering selling a second huge tranche under its sukuk program, and talkshave emerged on the Saudi transport's plan to use sukuk to finance its multi-billion dollar project.
Luxembourg-based ATLANTICLUX Lebensversicherung announced its USD100 million Salam III sukuk via a Fitch rating press release on August 9. This is the first surprise. We still await Oman's Tilal to announce plans to close its first Omani sukuk deal. In Egypt, once the political conflict has been resolved, authorities are eyeing to sell the nation's first sovereign sukuk. Other issuers could be Saudi's Almarai and Bahri, IILM short-termed sukuk, Bahrain's Al Baraka, Dubai's DMCC and Dubai Investments Park.
For more in-depth analysis on select sukuk deals and trends, discussions and findings, and exclusive content, please join the Islamic Finance Gateway Community, where you can receive daily and weekly briefings or invitations to focus sessions and events.
Adnan Halawi is product manager at Zawya Islamic Finance and can be reached atadnan.halawi@thomsonreuters.com
http://www.zawya.com/story/Sukuk_value_down_as_volumes_rise-ZAWYA20130813080534/?utm_source=zawya&utm_medium=web&utm_content=editors-pick&utm_campaign=story
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