DUBAI — Issuance of Islamic bonds (sukuks) is expected to rise significantly after the Eid holidays and remain strong throughout the rest of the year, according to recent reports.
The trend towards increased sukuk issuance is driven in part by attractive pricing for Islamic notes. Buyers are also benefiting from wider spreads, presenting an opportunity for enhanced returns.
Companies slated to issue sukuks over the next quarter include Omniyat Holdings, the holding company for Omniyat Properties, and Amlak Finance. Omniyat said on Tuesday that it intended to raise up to $200 million through a sukuk which it planned to launch by year end or in the early part of 2008. The money raised will be used to help finance its real estate developments in Dubai and its expansion plans in Abu Dhabi and Saudi Arabia. Omniyat has also said it intends to launch an investment bank in Bahrain in November.
Amlak Finance, the UAE's second largest provider of Islamic home finance, is planning to sell a $260 million sukuk before the end of the year, in the form of mortgage-backed securities. The delayed issuance comes several months after the UAE Central Bank rejected Amlak's application for an Islamic banking licence.
State-owned Sharjah Electricity and Water Authority (SEWA) is also planning to raise at least $2.72 billion to finance a power project, its director-general Al Waleed Khalid Bin Khadem, said in September. Dubai Electricity and Water Authority (DEWA) will also be issuing up to $2.5 billion of Islamic bonds to help finance the increase in electricity production needed to meet the needs of the emirate's rapidly rising population.
In addition, Kuwait-based Abyaar Real Estate Development Co is considering selling $1 billion of Islamic bonds in January to finance projects. And Ras Al Khaimah Investment Authority (RAKIA) plans to sell Islamic bonds in dollars, according to a statement emailed to Bloomberg by HSBC Holdings, one of the banks organising the sale. The Government of Ras Al Khaimah will guarantee the securities. According to the statement Credit Suisse Group and NDB Investment Bank have been hired to manage the sale of the bonds.