Middle East Bonds

Middle East sukuk issuance is set to continue to grow and investor demand will grow with it, said senior bankers at an Islamic finance event this week. But regulators and policymakers must do more to help increase the number of non-bank financial institutions if this growth is to be sustainable, warned buyside officials.

Dubai Electricity & Water Authority powered back into the sukuk market this week, pricing a $1bn five year benchmark deal inside the Dubai sovereign curve and achieving in excess of $5.5bn of orders.

The sukuk market is rumbling back into life, with Dubai Electricity & Water Authority having mandated banks as it eyes up to $1bn of sukuk this month. Several other issuers are also lining up deals, meaning the Islamic market’s frozen pipeline could soon thaw.

Dewa is not the only borrower eyeing a return to the sukuk market (see Dewa story). Qatar International Islamic Bank wants to set up a $2bn sukuk programme and has asked its general assembly to approve the plans. The recommendation comes ahead of QIIB’s annual general meeting, which will is due to be held on March 10 in Doha.

JP Morgan plans to make a bigger push in Islamic finance — including sukuk arranging — and has appointed Hussein Hassan to a newly created role as global head of its Islamic finance practice.

Middle East bond issuance came roaring back this week, as the Dubai government and Qatar Telecom broke new ground for the region with long dated, dual tranche deals. The two borrowers aggressively priced a total of $2.25bn of paper, catapulting their curves forward with 30 year offerings — something very seldom seen in the region, writes Dan Alderson.

Senior Egyptian government officials and advisers on Thursday strove to present a united front on the country’s sovereign sukuk plans, following a week of intense debate over Shariah compliance and use of national assets.

Manama, Bahrain –18 December 2012 – The Central Bank of Bahrain (CBB) announces that the monthly issue of the short-term Islamic leasing bonds, Sukuk Al-Ijara, has been subscribed by 100%.

Nakheel Properties looks to be on course to make a Dh201m ($54.8m) payment on Saturday to holders of one its sukuk. The Dubai-based company, which was hit hard during the Middle East financial crisis, said on Wednesday that it has made the necessary arrangements to enable its paying agent Deutsche Bank to make the third profit payment on the notes.

Global sukuk issuance in 2012 has reached $138.5bn, according to the IFIS Sukuk Database, with a run of Asian deals this month taking the market further into record territory. The running total is 49% up on the $93bn issued throughout the whole of 2011.

Dana Gas completed a $920m sukuk restructuring with creditors this week, having defaulted on the notes in early November. The Sharjah-based company will pay down $70m in cash and issue two new $425m five year sukuk — one ordinary and one convertible — paying 9% and 7%, respectively. The previous deal’s coupon was 7.5%.

Dana Gas has received $48m of overdue liquid fuel payments from Iraqi Kurdistan. Difficulties in obtaining money that the Sharjah-based company is owed for its operations in Kurdistan and Egypt were a key contributing factor to its failure to pay on a $920m sukuk that matured at the end of October.