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Tuesday, 6 November 2007

Gulf Islamic bonds 'to top $100 billion'

DUBAI: A Gulf government is considering selling an Islamic bond in the next few months, helping build a benchmark for a market that would be worth as much as $100 billion by 2010, Deutsche Bank said yesterday.
The total value of Gulf Islamic bonds would more than double this year to $35 bn from $17bn, the bank's Middle East chief executive Henry Azzam said.
By the end of 2009 the value of regional sukuk, or Islamic bonds, will be worth $100bn, he said.
"What is missing today is sovereign bond or sukuk benchmarks," Azzam said at MEED's Capital Markets conference in Dubai.
"No goverment is issuing regular sovereign bonds or sukuk to help pricing for corporates."
One Gulf government is seriously considering selling an Islamic bond in "the next few months", he said.
Bahrain regularly sells Islamic bonds, although they tend to be below benchmark size, typically at $500 million.
It was time for Kuwait, Saudi Arabia, Qatar and the UAE to follow suit, Azzam said.
Gulf borrowers had raised about $13.2bn in sukuk at the end of August, topping last year's record of $9bn and overtaking sales in Asian Islamic finance hub Malaysia for the first time, according to ratings agency Moody's Investors Service.
A Reuters poll showed last week that bankers expect the Gulf Islamic bond market to recover from the global credit crunch by April as companies get used to higher borrowing costs after a summer of turmoil that largely killed off sales.
Demand for sukuk has surged as more of the world's 1.3bn Muslims seek investments that comply with their beliefs. In the Gulf, growth has been powered by a quadrupling of oil prices since 2002. - (GDN, 5 Nov 07)

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