Saudi Arabia is making $1 billion daily in petroleum revenue

This balance of payment surplus has “fueled” enormous growth in demand in the Kingdom and the rest of the GCC. One consequence of this growth is the high inflation rates now prevalent in the GCC economies, according to Issam Zaid Al-Tawari, vice chairman and CEO of Rasameel Structured Finance Company, a specialized investment company in structuring, raising and distribution of sukuk through financial engineering as well as spinning off companies as a result of asset restructuring.

Another consequence is the growth of the sovereign wealth funds (SWFs). There is probably over $2 trillion in GCC sovereign wealth funds. Some of this should be invested in infrastructure and non-petroleum sectors of the GCC economies, but it will be difficult to do this in a way that does not increase liquidity and the growth of credit, Al-Tawari told Arab News in an interview.

“The Saudi Arabian Monetary Authority’s strict restrictions on lending in effect during 2005 and 2006 will probably be copied by other central banks,” said Al-Tawari, who began his career with Arab Banking Corporation (ABC) Bahrain and served on the board of directors of a number of companies and funds.

Asked for detailing Rasameel’s services in securitization, financial engineering and sukuk, Al-Tawari said the securitization focused investment company supervised by the Central Bank of Kuwait was well equipped to provide Shariah-compliant financing and advisory services for a wide range of funding needs. “Whether it is advisory services, securitization, Mudaraba sukuk, or a Shariah-compliant method of providing funding without increasing leverage or diluting earnings, we can offer advice and solutions to GCC companies,” he added.

In the GCC, Rasameel is recognized as one of the major players and experts in the securitization area. “We provide advice or advisory services to a wide range of companies that are considering if securitization or structured finance is right for them. We compete in this market by providing the best service,” he said. Asked about the sources for providing financial liquidity to projects, Al-Tawari said that short-term liquidity was provided by standard Tawarruq transactions.

“Rasameel is working on a product that will provide more asset-backed short-term funding alternative,” he added.

“Rasameel is a Shariah-compliant company and Shariah finance prohibits most of the excesses that have afflicted the credit markets in the US and Europe. Thus, Rasameel’s clients can be assured that our transactions will satisfy their funding or investment requirements but do so in a safe and secure manner,” Al-Tawari said.

Recent Rasameel work has been the financing of a mall in Bahrain, funding for several consumer finance companies, and organizing advisory and debt arrangements for a number real estate companies.

As we open new offices throughout the GCC, in the Rasameel pipeline are several large securitization projects under consideration and evaluation for consumer leasing firms, several Shariah-compliant funding facilities for very large real estate developments and a number of new advisory contracts. Rasameel is also positioning itself to assist mortgage originators as that industry is expected to grow phenomenally, especially in Saudi Arabia. Rasameel is continually bringing in experts to provide new services.

Despite the rapid growth and enormous liquidity in the GCC, the capital markets in the region are not fully developed. Both legal and regulatory infrastructures need a great deal of work,” he said.

“In our role as a pioneer, we have been expanding the boundaries of the GCC capital markets. This means working with regulators, testing the legal infrastructure, explaining transactions to clients and challenging investors to evaluate new opportunities. It is hard work but somebody has to do it,” he added.

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