UK Hosts Meeting to grow Islamic Growth in the SUKUK markets worldwinde-in excess of $120 Billion.

On March 6, 2008 · In Bahrain, Britain, Islamic Bonds, Shariah insurance, Sovereign Wealth Funds, SUKUK

(MENAFN – Bahrain Tribune) With the current outstanding volume of global sukuk market is estimated in excess of $120 billion, the Islamic debt and capital markets are set for huge growth over the next few years.The existing size of the market is projected to further increase to over $200 billion in the next year, especially as more corporate issuances – both rated and unrated – come to the market. The growth and opportunities of sukuk in the most potential markets will be in the spotlight at the upcoming iFinance Seminar on Capital Markets to be held next month in the UK.Sukuk origination and issuance, for instance, is now taking place in the EU, Japan, Singapore, US and even South Africa in addition to the phenomenal growth in the traditional markets of the Gulf Cooperation Council (GCC) countries and South East Asia, especially in Malaysia. Similarly, Islamic securitisation is also starting to take off in the GCC and Malaysia.Judging by the spate of recent issuances and transactions, which are now involving major corporates such as Saudi Basic Industries Corporation (SABIC), Saudi Electricity Company (SEC), Dar Al-Arkan Real Estate Development Company, Emirates Islamic Bank, Dubai Islamic Bank, Abu Dhabi Islamic Bank, Khazanah Berhad (the investment arm of the Malaysian Finance Ministry) and Cagamas Berhad (Malaysian home loan company), the sukuk and securitisation market is set to flourish both in terms of geography, numbers and size and structure.

In fact, the sukuk is now becoming an internationally acceptable Islamic capital market’s instrument akin to the Murabaha and the Ijarah contracts. Sovereigns such as the UK Treasury and the Japanese Ministry of Finance are now seriously exploring the potential use of the sukuk as a debt management tool in the wholesale sterling and yen markets. The World Bank and the International Finance Corporation have already issued two local currency papers in Malaysia. The IFC has subscribed to sukuk issuances in the GCC markets.

The biggest potential is in the quasi-sovereign (utilities) and both rated and unrated corporate issuances, as companies and banks seek to raise finance to fund expansion, refinancing existing more expensive debt, or for general balance sheet purposes. Sukuk could also be an ideal financing tool for infrastructure development and project financing. Despite the credit crunch woes in the conventional financial markets, as result of the subprime mortgage crisis in the US, Islamic mortgage securitisations and other securitisations are set to increase in 2008 and beyond.

In light of this, a focused seminar on Islamic Capital Markets could not be more timely, especially to inform the market and to discuss issues relating to structures, UK Host.

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