Middle East Bonds

Sukuk is one of the fastest growing markets in the Islamic finance sector. In this second part of our Islamic Finance Basics series, we look at the underlying principles of sukuk, its development as an asset class and how it compares to conventional instruments.

The International Islamic Liquidity Management Corporation (IILM) will auction its third $490m short term dollar sukuk next week.

The Islamic Development Bank will hit the road on Sunday as it lines up a dollar benchmark sukuk of as much as $1bn. The deal will be a welcome — if tightly priced — issue for UK Islamic banks, given its status as the only triple-A rated sukuk issuer that qualifies for liquidity buffers under Bank of England rules.

General Electric, the only western blue chip corporate to date to have issued an international sukuk, has not ruled out a return to the Islamic market when its deal matures this year.

The average size of an emerging market bond in the first weeks of this year has leapt skywards compared to previous years while the number of deals priced has plummeted, according to Dealogic data. This may be a function of sovereigns having so far dominated the market — especially in CEEMEA — but is a trend that could be the shape of things to come for the rest of the year.

In 2013, several CEEMEA issuers roadshowed, mandated or even released price talk for a new Eurobond before postponing the deal. EuroWeek Emerging Markets recaps the borrowers that may be waiting for a window, and finds out whether they are still looking or have embarked on another funding plan.

Prospective international sukuk debutante Morocco is pushing ahead with plans to introduce Islamic banking for the first time, with parliament set to take a vote on the government’s draft bill as early as April.

The international sukuk drought is over — and how. Dubai Investments Park and the Export Import Bank of Malaysia secured tightly priced debuts this week amid a deluge of demand that spoke volumes about investors’ need for more Islamic issuance and a greater diversity of borrowers.

B Communications, a company that holds a stake in Israeli telecoms firm Bezeq, sold an increased debut high yield bond on Monday.

The international sukuk drought is over — and how. Dubai Investments Park and the Export Import Bank of Malaysia secured tightly priced debuts this week amid a deluge of demand that spoke volumes about investors’ need for more Islamic issuance and a greater diversity of borrowers.

Dubai Investments Park achieved an order book of over $4bn as it priced its $300m debut five year sukuk well inside guidance at 265bp over mid-swaps on Thursday. The deal was boosted by being the first Middle East Islamic bond of the year but also came amid a resurgence of sentiment around Dubai credits.

Dubai Investments Park gave initial price thoughts of low 300bp over mid-swaps on its $300m five year debut sukuk on Wednesday, but investors are expecting much tighter pricing. Leads tightened guidance to 300bp area and the note was already trading up in the grey market around half a point.