IslamicFinance.de

According to Standard & Poors recent government initiatives will spur momentum for Turkey’s fast-growing Islamic banking market. Islamic banks in the country have doubled their share of overall banking assets over the past decade to roughly 5% or $42.2 billion at year-end 2015. The annual volume of sukuk issuance in the country increased nearly 20-fold over the same period, growing from $100 million in 2010 to almost $2bn by year-end 2015. Credit analyst Mohamed Damak said Turkish Islamic banks’ market share is expected to double to more than 10% by year-end 2025.

While the medium-term prospects for the global sukuk market remain strong, the prospects are weaker for Dubai-based issuers and potentially other countries in the Gulf. That’s the assessment of ratings agency Standard & Poor’s (S&P), which also said that Malaysia and South East Asia were likely to lead the global sukuk market in issuance of the next couple of years.

Press Release

DUBAI, October 15, 2009--A report published today by Standard & Poor's Ratings Services answers questions related to its view on the likelihood of extraordinary government support for Dubai-based government related entities (GREs), and what factors may affect this in the future (see "What Factors May Affect S&P's View Of The Likelihood Of Extraordinary Government Support For Dubai-Based GREs?").

Specifically, the report answers the following questions:

-- What are Standard & Poor's current expectations regarding the likelihood of extraordinary support from the Government of Dubai for its GREs?
-- What track record does the Government of Dubai have in supporting its GREs?
-- To what extent are the ratings affected by Dubai's challenging debt burden?
-- How might the GRE issuer credit ratings be affected by a restructuring of debt in an unrated GRE?
-- How might the Nakheel repayment affect the GRE issuer credit ratings?
-- Does Standard & Poor's believe the Government of Dubai has the resources to support its GREs?

Press Release

PARIS, September 2, 2009--New issuance of sukuk (bonds compliant with Islamic law) topped $9.3 billion in the first seven months of 2009 compared with $11.1 billion during the same period in 2008, said Standard & Poor's Ratings Services in a report published today, "The Sukuk Market Has Continued To Progress In 2009 Despite Some Roadblocks."

"The smaller amount of issuance was due not only to the still-challenging market conditions and drying up of liquidity, but also to the less-supportive economic environment in the Gulf Cooperation Council countries, particularly in the United Arab Emirates," said Standard & Poor's credit analyst Mohamed Damak. "The medium-term outlook for the sukuk market remains positive, though, in our view, given the strong pipeline--with sukuk announced or being talked about in the market estimated at about $50 billion--and efforts to resolve the major difficulties impeding sukuk market development."

High Financing Costs May Crimp Future Issuance Of Project And Infrastructure Sukuk In The Gulf

LONDON, April 28, 2009--The global slowdown, along with local macroeconomic factors, appears to have curtailed the anticipated growth of sukuk (including those for infrastructure and project finance) in the Gulf region, says a report published by Standard & Poor's Ratings Services titled "Islamic Sukuk Come Of Age In Infrastructure And Project Finance." What's more, investor appetite for these instruments may continue to be adversely affected by the high costs of financing, predominantly local investor appeal, a real estate downturn, hydrocarbon prices, and accounting issues.

Press Release

PARIS (Standard & Poor's) Jan. 28, 2009--Standard & Poor's Ratings Services said today that it has lowered its long- and short-term counterparty credit ratings on Bahrain-based Arcapita Bank B.S.C. to 'BB+/B' from 'BBB/A-2' and placed the long-term rating on CreditWatch with negative implications.

"The downgrade and CreditWatch placement reflect our opinion of Arcapita's weak liquidity profile amid an increasingly difficult operating environment," said Standard & Poor's credit analyst Mohamed Damak.

At the same time, we believe that the value of Arcapita's own investments--mainly in private equity and real estate--could decline in value given current market conditions (like other private equity firms). We view Arcapita's leverage as high. We understand that Arcapita made certain investments in 2008 that it was not able to fully place with customers that triggered a decline in liquidity and an increase in investment leverage (as measured by the ratio of total investments to total equity).