International Financing Review

MAF joins growing wave of successful Gulf sukuk

Dubai’s Majid Al Futtaim this week became the first Gulf corporate to print a senior unsecured sukuk in 2015, as Middle Eastern issuers continue to dampen worries about liquidity drying up in the region - at least for Islamic bonds.

Goldman revives sukuk

Goldman Sachs last week revived plans to issue a debut Islamic bond, a deal that was first mooted three years ago. In September 2011, Goldman set up a sukuk programme registered under the commodity murabaha format with the intention to follow it up with a deal. But some Islamic finance participants raised concerns over whether the proceeds would be used to lend interest-based money to Goldman’s clients. Those close to the transaction denied this at the time, but the programme expired unused. The hope is that the change in structure and circumstance would facilitate a different outcome this time round. The upcoming transaction will use the wakala structure, a cost-plus model with which Middle East Islamic investors are more familiar with, and it will be underpinned by crude oil assets.

Asian sovereigns join sukuk rush

Hong Kong, Indonesia and Pakistan are banking on pent-up investor demand as they look to raise up to a combined US$3.5bn in the fast-growing Islamic bond market. The three sovereign sukuk issues, including a planned US$1bn debut from Triple A rated Hong Kong, are set to launch before the end of September. Indonesia is Asia’s only regular in the global sukuk market, having issued annually since 2010. Pakistan has sold Islamic debt overseas only once before, in 2005, while Malaysia has typically preferred to target its own domestic market. Hong Kong, in particular, is looking to promote itself as a regional hub for Islamic financing to capitalise on growing trade links between Greater China and the Middle East.

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