Egypt is considering tapping the international sukuk market in the coming fiscal year, as it looks to diversify funding sources to drive forward its economic revival efforts.
The Shariah-compliant issuance, either in dollar or euro-denominated sukuk, which Finance Minister Mohamed Maait hopes will happen in fiscal 2018-19, would mark a revival of a plan shelved since 2013 when the government under then-president Mohamed Mursi issued the law to pave the way for the country’s first Islamic bond.
Total Sukuk issuance dropped by 15.3 per cent compared with the same period last year, reaching $44.2 billion compared with $52.2 billion first half of 2017. This drop was even more pronounced for foreign currency Sukuk issuance at 45 per cent, likely due to the absence of major issuances from the Gulf Cooperation Council (GCC) countries seen in 2017.
In the second half of 2018, S&P expects Sukuk issuance volumes will continue to be slowed by the global tightening of liquidity conditions as well as by lower financing needs of some GCC countries as a result of oil prices stabilising at higher levels.
Morocco is preparing to issue its first sovereign Islamic bond, or sukuk, worth 1 billion dirhams ($105 million) in the coming weeks after adopting a regulatory framework governing sukuk sales, Finance Minister Mohamed Boussaid said on Thursday.
"The legal framework is now prepared for Morocco to issue its first sovereign sukuk in the coming weeks," Boussaid told Reuters by phone.
A total of $12 billion worth of Sukuk was issued in March 2018, bring global Sukuk issuance to $30 billion in Q1 2018—a 44.4 per cent surge from $20.8 billion for the same period last year, according to the latest statistics by RAM Ratings.
The increase is likely due to a boost from Saudi Arabia with issuance reaching $6.5 billion as at end-March 2018 as compared to $184.8 million at the end of March 2017, marking the highest growth, according to the Khaleej Times.
The Japanese supervisory body has allowed banks under its watch to engage in so-called Islamic finance at their overseas branches starting this month. It was previously allowed only at their subsidiaries. Acting early will further secure Japan's rightful place as a leading financial market in a fast evolving global system. It will also strengthen links with the Middle East and Southeast Asia -- two of Japan's fastest growing export markets.
The recovery in oil prices will have a positive effect on the general business environment across the Gulf region in general and the sukuk market in particular as it will help ease funding woes of investors, senior bankers say.
Talking to Khaleej Times on the sidelines of the Bonds, Loans and Sukuk Middle East conference, senior bankers of Noor Bank said higher oil revenue injects more cash into the system, which increases the funding available to support regional growth.
Global sukuk is expected to register growth of between 15% and 20% in 2018 on the back of improved macro-economic conditions and continued expansion in the Islamic nance ecosystem.
Franklin Templeton Investments (ME) Ltd CIO of global sukuk and MENA (Middle East and North Africa) fixed income Mohieddine Kronfol (picture) said compounded annual growth rates for the global sukuk market have averaged 24% between 2000 and 2017, to reach US$442 billion (RM1.77 trillion).
Morocco will finally launch its first Islamic bonds, better known as sukuk, after Bank Al Maghrib (BAM) and the board of Higher Council of Ulemas’ top experts gave approval to five participatory banks to set up their Islamic finance subsidiaries one year ago, Bloomberg reported.
Sukuk is the Arabic name for financial certificates defined by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), as “securities of equal denomination representing individual ownership interests in a portfolio of eligible existing or future assets.”
Following the successful issuance in 2014 of a five year $1Bn Sukuk which attained an order book of $4.7Bn. The AA stable (S&P) / Aa1 stable (Moody's) / AA+ stable (Fitch) Government of the Hong Kong Special Administrative Region of the People’s Republic of China (HKSAR) will begin investor meetings on 18 May.
Saqib Awan was working as an attorney at the global law firm DLA Piper when his firm was asked to advise a Saudi Arabian company as it structured a bond deal that would comply with Islamic law, also known as Sharia law. The type of bonds, called sukuk, usually involve placing assets into a special purpose vehicle (SPV) and then issuing certificates that give investors an ownership stake in the asset pool. Since Islamic law prohibits the charging or paying of interest, sukuk transactions often look more like equity than debt.