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Tuesday, 21 August 2007

Amlak warns of credit crisis impact on pricing of Sukuk

Increased costs in upcoming securitisations in the Middle East could be one of the consequences of the US sub-prime mortgage crisis, said Nasser Al Sheikh, chairman of UAE Islamic mortgage lender Amlak Finance. Al Sheikh said on the Al Arabiya TV channel that the pricing of Islamic bonds in the region could be hit by the fallout from recent market turmoil, reported newswire Zawya Dow Jones.“The escalating mortgage crisis might increase price of bonds by an average of 10 basis points,” said Al Sheikh. However, Al Sheikh said there would not be any direct impact on home finance in the UAE, which has had a real estate boom since opening home ownership to foreigners. He said the UAE market "is based on prime lending rather than sub-prime”.A rise in US mortgage defaults on sub-prime loans, offered to people with poor credit ratings, plunged global stock markets which increased fears of a wider financial crisis. Amlak Finance, the largest publicly held Islamic finance company in the UAE, in June launched plans to sell as 1 billion dirhams ($270 million) in asset-backed securitisation to regional and international investors.UAE-based competitor Tamweel in July sold a $210 million asset-backed securitisation at a price of 35 basis points over the London Interbank Offer Rate, or Libor. - (AB, 21 Aug 07)

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