Dec 07 2011
|more articles from|
Interview with a Sukuk Expert
Samer Mardini - Vice President - Fixed Income & Islamic Financial Products Trader Middle East & North Africa - SJS Markets
How do you view the recent surge in sukuk issues and what are the main reasons behind this?
Sukuk market continues to grow despite the uncertainty of the global financial markets. We continue to see a lot of appetite from many issuers in different countries. Primary sukuk market surged up significantly in 2011 especially in the second half attracting local and foreign investors.
Do you think issuers were able to sell their sukuk cheaper this year than earlier years?
Issuers are trying to accelerate the deals given that the debt crisis in USA & Europe will push yields higher next year. Currently, the borrowing costs in the region fell to the lowest after the global financial crisis in 2008. There are some new issue coming up into the market from many issuers such as Emirates NBD, Albaraka Turk, Dubai Islamic bank.
Given your role in GCC and the region, do you see improved liquidity?
At the beginning of this year we have seen a flood of liquidity from many Arab countries shifted to this region, and that was because of the Arab spring.
In my opinion the safest sukuk are Abu Dhabi and Malaysian Names such as: TDIC Sukuk,ADIB Sukuk, FGB Sukuk, Malaysia Global Sukuks, and Islamic Development Bank Sukuks. The most attractive sukuk in terms of yield are Dubai and Saudi names such as Jafza Sukuk, Difc Sukuk , Dana Gas Sukuk, Dubai Global Sukuk, Emaar Sukuk, DP World Sukuk, and DAAR Sukuks.
What are your expectations for 2012?
The MENA region could also get impacted from the ongoing Euro crisis. However, AbuDhabi, Qatar and Saudi Arabia, backed by their solid oil and gas assets should continue to trade tighter than the rest of the region. The Arab spring has brought democratic change,as well as uncertainties, to the region and Egypt and Syria are still in a state of flux. We are of the opinion that the Qatar, UAE, Saudi Arabia, Jordan, Oman and even Bahrain should remain peaceful, the first two being the most stable.
Dubai still faces challenges. Despite its successful restructuring a year ago, Dubai still has a significant amount of debt maturing in 2012. While Dubai could find it challenging to come to markets again after its successful issuance June earlier this year, we take comfort from Abu Dhabi's backstop.
Also, top officials from the Emirate have said that they shall stand behind their strategic assets which could face difficulty in refinancing - which in our opinion refers to DIFCDU and JAFZA.
Regional Governments should create regulated retail sukuk market similar of Stock markets where everybody can buy and sell sukuk easily; nowadays we are receiving huge demand from many individuals who are looking to invest in sukuk.
To view a list of top gainers and losers, view this report.
© Zawya 2011
© Copyright Zawya. All Rights Reserved.