Mohieddine Kronfol

Dana #sukuk: why the market is overreacting

The sukuk issued by Sharjah-based Dana Gas and recently denounced as non-shariah compliant will not damage confidence in the Islamic debt markets, as some have claimed. The gas provider's announcement in June that $700 million worth of its bonds are not compliant with shariah law in the United Arab Emirates (UAE) perplexed the market. The firm’s chief investment officer, Mohieddine Kronfol, said that the impact of this restructuring will be insignificant to the wider industry in the long-term. He added that Dana Gas is owed around $1 billion from Iraq and Egypt, Dana Gas is only one issuer in a global sukuk market with over 90 issuers. In his opinion, the media and public attention spent on Dana Gas is out of proportion with what has transpired so far.

GCC Sukuk Attractive Amid Rising Rates Prospects

The Middle East conflict raises concerns over the general outlook for the sukuk market. But portfolio managers remain positive both on fundamentals and technicals for sukuk as they also offer a potentially attractive alternative amid prospects of rising interest rates. Sukuk are considered as an attractive option for those whose mandate allows to test new boundaries. Mohieddine Kronfol, chief investment officer of Global Sukuk and MENA fixed income at Franklin Templeton Investments said, that "the lower duration and persistent strong demand from Islamic financial institutions should continue to support the market and allow it to perform well relative to other fixed income sectors, particularly those that have higher average durations."

Cautious approval for Dubai sukuk ambition

Some analysts see the ambition of overtaking London as the world capital of the sukuk business, as a challenge for Dubai's initiative to become the capital of the global Islamic economy. Mohieddine Kronfol, the chief investment officer for global sukuk and fixed income business for Franklin Templeton, thinks Dubai can establish itself in a leadership position in the long-term. Kronfol believes Dubai and the region need to be more mature in their overall approach to finance if they are to lead the Islamic economy. He cites the lack of a pension fund industry, the relative immaturity of the insurance and asset management businesses as examples of lack of financial depth.

Mideast bond sales soar to record as turmoil fades

Middle East bond sales are departing to a record start this year after political unrest that swept through some nations in 2011 decreased and as concern wanished that Europe’s debt crisis would disturb the request for regional debt.
Regional governments and companies raised $10.1bn in bonds in until now in 2012. A $4bn sukuk sale in Saudi Arabia, the biggest Arab economy, conducted a 55% rise in sales from the year-ago period.
Mohieddine Kronfol, Dubai-based chief investment officer for global sukuk and Middle East and North Africa fixed income at Franklin Templeton Investments, noted that they anticipate issuance to increase in the next 12 to 24 months, particularly with banks having to work harder to secure funding and extend credit to the private sector.

Algebra Capital sees the Mideast asset management grow from USD 80 bn to USD 300 bn

Algebra Capital sees the Mideast asset management sector to grow by 15 % from USD 80-100 bn to USD 300 bn by 2014. Fixed-income, which contributes less than 2-3 % of regional assets compared with a majority in equity investments, could provide a "tremendous growth" opportunity if regulators and governments focus on creating the domestic demand for new issues, Managing Director Mohieddine Kronfol said.

Franklin Rersouces Inc. holds a 40 % stake in Algebra Capital and have jointly launched 5 products on the equity side and now looking at fixed-income products and Islamic.

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