Sukuk structures to be 'more conservative'

Future sukuk structures are set to be more conservative, Mohammed Tariq, Head of Treasury at the Islamic Development Bank (IDB) told delegates at the Meed Capital Markets conference in Dubai. 'There has been some clarity but there are still some questions. There were underlying Shariah issues that have now been clarified.'

Tariq told delegates that the bank's sukuk was listed on the London exchange as they were seeking international investors and a number of sukuk had already been listed prior to the IDB's. 'We may list locally, in Bahrain and of course the DIFC, but London is the main one at the moment.'

Looking ahead, Tariq said that guidance was still needed on the structuring of issues: 'More still needs to be done. There have been some defaults. Investors must do research to see if they are backing the underlying asset or the issuer.'

Speaking of the region's bond market in 2010, Jan Plantagie, Managing Director and Regional Manager for Standard and Poor's told delegates that market activity had picked up: 'Issuance activity has accelerated in the past few months. It will be interesting to see if bond issuance in local currency increases.'

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Referring to the region's market Plantagie said that global regulation was also changing post-financial crisis. 'It is important to find the right balance. There will be G20 agreed changes and local changes. Whatever is chosen will have to be on a par globally, and also transparent.'