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Dubai aims to lead sukuk market
Muzaffar Rizvi / 21 March 2013
The future of Islamic bonds, or sukuk, is bright and Dubai has potential to become the world’s top sukuk market in coming years, a top official of Dubai Financial Market said.
“The outlook for sukuk market is good as its demand is very strong compared to conventional bonds. We are confident about the success of the sukuk market in Dubai,” Essa Kazim, managing director and chief executive of Dubai Financial Market (DFM), told Khaleej Times on the sidelines of the listing ceremony of Emirates airline’s sukuk on Nasdaq Dubai on Wednesday.
Shaikh ahmed bin Saeed ringing the opening bell at DFM to mark the emirates airline’s $1 billion sukuk listing on Nasdaq Dubai on Wednesday. — Supplied photo
Shaikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates airline and Group, rang the opening bell at DFM to mark the airline’s $1 billion sukuk listing on the exchange. It brings the nominal value of sukuk listed on Dubai exchanges to $10.625 billion, the third largest total in the world after London and Malaysia.
The listing of the Emirates sukuk supports Dubai’s intensive efforts to promote Islamic economy after the launch of [Dubai the Centre of Sukuk] initiative by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, and in line with his vision to position the emirate as the capital of Islamic economy globally.
“As an international exchange, Nasdaq Dubai gives our listing global visibility whilst at the same time providing us with a listing in the city where we are based. The exchange’s high regulatory standards and streamlined listing procedures make it an ideal venue for listing capital-raising securities,” Shaikh Ahmed said.
He said the airline would use the money raised through the sukuk to fund new aircraft due to be announced in coming months.
The sukuk issued by Emirates, one of the fastest growing global airlines, was sold successfully to investors across the globe. The Islamic bond was about three-times subscribed as accounts in Mena snapped up 85 per cent followed by Europe at seven per cent, Asia five per cent and offshore US at three per cent.
Mohammed Abdulla Al Gergawi, Chairman of the Executive Office of Shaikh Mohammed bin Rashid Al Maktoum, and Chairman of the Higher Committee for Development of the Islamic Economy Sector, said: “As the expansion of Islamic economy gathers pace, the Emirates sukuk provides further evidence of Dubai’s excellence as a centre for issuing, listing and trading of Islamic capital-raising securities after the successful listing of Dewa sukuk last week. We will continue to strengthen the leading position of the UAE in this sector through various efforts and the creation of a range of world-class Islamic financial products, for both institutions and individuals.”
Essa Kazim, who is also the secretary-general of the committee, said: “Dubai’s capital markets are growing rapidly in scope and sophistication, with Islamic finance playing a leading role. The issuance of the Emirates sukuk, and its listing on Nasdaq Dubai, demonstrate the strength of Dubai’s financial markets architecture and its ability to serve leading international companies.”
“We are trying to capture all sukuk related to Dubai-based firms,” he said, adding that more sukuk listings on Dubai exchanges are expected this year.
Last week, Dubai Electricity and Water Authority (Dewa) listed its $1 billion sukuk on Nasdaq Dubai. Dubai Islamic Bank also launched a $1 billion hybrid sukuk last week and it is also expected to list it in Dubai. Etisalat Sukuk Company and Al Hilal Bank are also expected to issue $1 billion sukuk each this year.
Chairman of Nasdaq Dubai Abdul Wahed Al Fahim said this listing by one of the world’s leading airlines is an important step towards Nasdaq Dubai’s goal of becoming the largest exchange in the world for sukuk, by listed value.
“We look forward to welcoming sukuk issuers from around the world as well as our own region, as the asset class grows in popularity among investors of all types and in all areas of the globe. As well as providing a listing venue, Nasdaq Dubai plans to expand the range of services that it offers to sukuk issuers and investors,” Al Fahim said.
Global sukuk issuance reached $140 billion in 2012, up 64 per cent from $85 billion in 2011. Issuers in the UAE issued more than $6 billion of sukuk in 2012.
According to banking officials, 2013 is expected to witness significant expansion of sukuk market in Mena region. Zawya estimates placed the sukuk pipeline for 2013 to be above $14 billion.
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