Sukuk sales to hit $46 billion in 2011: BMB Islamic

The global Islamic bond market could see issues of close to $46 billion in 2011 as investor confidence returns and new issuers emerge in the growing Islamic finance industry, BMB Islamic's chief executive said.
With economies recovering from the financial crisis and the restructuring of state-owned entities like Dubai World gaining momentum, sukuk is once again going to emerge as the preferred way to raise money, Humayon Dar told Reuters on the sidelines of a conference in Dubai on October 25.
BMB Islamic is the Sharia advisory and structuring subsidiary of Cayman Islands-based BMB Group which has businesses that include wealth management, infrastructure and real estate. Dar said the sukuk market would return to pre-crisis levels next year, hitting near the 46 billion mark.
"Even now, in 2010, there has been a lot of activity in Islamic finance and that trend will continue," Dar said. However, global analysts polled by Reuters have been more cautious, predicting that global sukuk issuances could be below $25 billion next year.
Until the last couple of months, the sale of Islamic bonds in the Gulf region were at a near-standstill, with Saudi Arabia's Dar al Arkan holding the only international sukuk issue.
Malaysia has not slowed down, issuing 62.5 percent of the world's Islamic bonds in the first three quarters of the year. Dar said more sukuk issues will come out of Malaysia and there should be a revival in the Gulf, boosted in part by the restructuring of Dubai World, and its unit, Nakheel.
Nakheel is expected to issue a $1.6 billion Islamic bond as part of its restructuring to help pay off its debts and that should be helpful to the market.
"Before all of this restructuring, investors weren't sure if restructuring was possible in Sharia," he said. Since August, the region has seen offerings as varied as Kuveyt Turk's three-year $100 million Islamic bond - the first sukuk out of secular Turkey - and Qatar Islamic Bank's $750 million sukuk.
Abu Dhabi Islamic Bank launched a non-equity investor roadshow in Asia, Europe and the Middle East last week, while a specialist at Saudi Hollandi Bank told Reuters Saudi firms may launch as much as 10 sukuk in 2011 as confidence returns.
Dar said after talking to European lenders, he expects more issues out of Europe. "Primarily we will see European investment banks" looking to issue more sukuk and develop other structured finance products, he said.
Dar said he was advising a French-based bank in Luxembourg on creating a Sharia-based structured finance platform, which should launch by December of this year.