Sukuk the rock to cling to in Middle East storm

Sukuk is already this year proving the format of choice for issuers in the Middle East. And no wonder — Islamic notes have a captive and asset-starved investor base, which tends to ensure strong secondary performance. It is an ideal product for times of stress such as those brought about by plummeting oil prices. Andy Cairns, head of origination and distribution at National Bank of Abu Dhabi explained that Islamic accounts are buy and hold so there is less secondary liquidity in Sukuk than in conventional bonds. Consequently it is a product that frequently underperforms in strong markets but outperforms in tougher times. Sukuk offers issuers access to an underserved pool of Islamic investors.