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Dubai: Early Signs of Transformation

Dubai: Early Signs of Transformation

Following last week’s announcement by HH Sheikh Mohammed bin Rahsed Al Maktoum the emirate’s intention to become a global sukuk hub and the centre of Islamic economy and finance, and around that announcement, Dubai witnessed a number of developments that could be viewed as early signs of transformation into that hub.


As far as sukuk (shariah compliant bonds) are concerned, Dubai’s government kick started the year with sale of a USD750 million Sukuk in January the international markets and listed it on Dubai Financial Market, in a move that sounded more like aiming at supporting the local bourse.

Less than a month later, towards the end of February, government-owned Dubai’s Water and Electricity Authority (DEWA) sold a USD1 billion Sukuk in the international market and chose to list it on Nasdaq Dubai this time.

Few days later, the government’s investment arm Investment Corporation of Dubai – better known as ICD – said it is in talks with banks to launch its first Islamic bond to take “advantage of increased demand for Dubai debt, which has benefited from international investors seeking emerging market assets, but also improved sentiment driven by a recovery in the local economy and state-linked debt restructurings”.

While earlier in February, Dubai Investments renewed its hopes to sell sukuk in the near future and could visit the debt market in April. Dubai Investments is a publicly listed company, which is partly owned by ICD itself.

Just today, Dubai Islamic Bank, a traditional issuer and arranger of Sukuk, said in a statement that it hired banks to arrange for the sale of a Tier 1 Sukuk and that this sukuk could close in March.

Benefiting from renewed trust, and given the huge needs to finance projects and expansion, and refinance debt, we expect sukuk issue to grow exponentially this year in Dubai.


Earlier this year, Dubai Financial Market issued a an exposure draft called DFM Standard for Issuing, Acquiring and Trading Sukuk and invited experts to comment before the end of March in a step to regulate and enhance sukuk issuance and trading in the emirate.

Few days after Sheikh Mohammed launched the transformation initiative, senior officials said Dubai plans to set up a central sharia board to oversee all Islamic financial products used in the emirate – a step that would nevertheless regulate the market, encourage investors, boost trust and safeguard and enhance the growth of the sector.

Similarly, a Memorandum of Understanding (MoU) was signed to establish a new asset management firm, specializing in Awqaf (Islamic endowments). Noor Investment Group, and Awqaf and Minors Affairs Foundation (Amaf) signed the MoU to set up Noor Awqaf LLC that will compliment the work of Amaf in offering enabling financial services to Awqaf entities around the world.

When Dubai once said it wants to build the tallest tower in the world, it did. When they said, they want the biggest mall, and biggest park, and biggest man-made island, they did. Will they be able to beat all other Islamic finance hubs and become the Islamic Finance and Sukuk capital? Early signs say they will!

Adnan Halawi


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Dubai rings sukuk bells


Technology, Transportation/Aviation, & Sukuk break records in September 2014!

While running on the treadmill today, and watching the news wire on one of the TV channels, it stopped me the news headline: Dubai airport welcomed 6.6 million visitors in August 2014, which is the highest number of visitors to the airport in the history of the Emirate.

The next headline was Apple sold 10 million iPhone 6 in 3 days, the highest sales in history of a new design by the company (perhaps by any other peer as well). The following headline was the fact the Alibaba gathered already USD 25 billion in an IPO that is to be considered the biggest IPO of all times!

Going back to my area of specialization, I noticed that September was probably the best month on record for the Sukuk industry with the biggest number of new states (sovereigns) selling sukuk for the first time in the histroy of the industry: Hong Kong, Luxembourg and South Africa. If we add Sharjah and IDB, then also possibly the largest number of international sukuk sold in one month. There must be something special about September!

Join me in the Zawya Islamic Community for active discussions on Islamic finance and Sukuk:

#Sukuk #Islamicfinance #Islamic #Recordbreaking #September #ZawyaIslamic

RACE: Who will sell more Sukuk in 2013: Saudi or Dubai Entities? Will Egypt join?

RACE: Who will sell more Sukuk in 2013: Saudi or Dubai Entities? Will Egypt join?.

RACE: Who will sell more Sukuk in 2013: Saudi or Dubai Entities? Will Egypt join?

As 1Q 2013 nears it end, the race seems to be limited to Saudi and Dubai entities this year when it comes to sale of shariah compliant bonds or Sukuk. Dubai which wants to become the world’s capital for Islamic finance and Sukuk, saw abundant issues thus far this year, similar to levels seen in 2007 before the global financial crisis hit the Emirate.

Following Dubai’s Department of Finance DOF Sukuk in January 2013, DEWA sold a 1billion dollar Sukuk, which was followed by Dubai Islamic Bank’s Tier 1 1bn$ Sukuk and Emirates Airline’s 1bn Sukuk. Menahwile, Nakheel issued another tranche for trade creditors. This seems to be just the beginning for a year full of rich and benchmark issues by Dubai’s companies and government entities that are seeking to  refinance their debts or to finance new projects.

Neighboring Saudi Arabia remained dormant so far this year. However, Saudi Arabia last year managed to rank second worldwide in terms of sukuk issues when around USD10 billion of sukuk were issued placing the Kingdom ahead of UAE for the first time in history.

Will the Kingdom maintain this ranking this year? Almaraii, Saudi Bin Laden, Sadara and Riyad Bank are just about to sell sukuk. And if GACA or any government owned entity sells a benchmark sukuk, then the Kingdom “might” be able to catch up with Dubai’s pace again!

Both cases, exciting times ahead! Qatar, Oman and Turkey are very interesting spots this year! And if Egypt joins the race, then we can start talking about “MENA sukuk” on the map as instead of “GCC sukuk” vis-a-vis Malaysia (South East Asia) sukuk landscape.

To learn more about the latest developments on Sukuk Law in Egypt, Join a discussion with a drafter of Egypt’s new sukuk law.

Register by emailing “Egypt Session” to


Dubai: Early Signs of Transformation

Dubai: Early Signs of Transformation.

Growth and Development of the Sukuk Market in Europe

Despite a slow growth of the Sukuk (Islamic bonds) market in Europe, one can easily count few developments and trends that signal a growth in the contribution to the growth of the sukuk market in European continent, albeit a shy one.

In terms of sovereign sukuk issues, only the German Saxony Anhalt issued a 5-year sovereign sukuk back in 2004, which back then in time, gave hope that more European states will embark on selling sukuk. Since then, all we have heard is plans to sell sukuk by countries such as Ireland, United Kingdom, France and other governments. Needless to mention that the main reason behind selling Islamic debt by these governments is to raise funds from alternative sources, while the main hurdle remains mostly either an opposition from political parties to go “Islamic” and the unfriendliness of the regulatory and tax framework in these jurisdictions to adopt that type of instruments or financing.

However, and despite a slow progress of evolution of sovereign sukuk market in Europe, there are two things that show healthy growth on the other hand. One being the rise of some European stock exchanges as key listing exchanges for Sukuk such as London Stock Exchange which has the largest value and szie of sukuk listed globally. Similarly, and to a lesser extent Luxembourg and Irish stock markets. For some reasons, global sukuk issuers choose to list their sukuk on these stock exchanges and the friendliness, ease, transparency and facilities provided by these regulators cannot go unnoticed.

The second remarkable development is the rise and issuance of some corporate sukuk from Europe. Though very small in size, these corporate sukuk proved that many companies, especially shariah compliant ones, are interested in raising funds through Shairah compliant channels, and that investors who are thirsty for Shairah compliant investments are keen on investing in these tools. The most recent example was the Milestone Capital Sukuk sold by UK-based Gatehouse Bank and listed on Channel Island Stock Exchange. Last year, two companies from France sold sukuk while a year earlier in 2011, International Innovative Technologies, also based in UK, sold an international sukuk that was listed on Cayman Stock Exchange.

Rumors say that many sovereigns and companies showed interest in selling sukuk, whther domestically or internationally, and some of them – will choose Malaysia to sell their Islamic bonds – such as Ireland’s Electricity Supply Board (ESB).

Neighboring Turkey, now a European state, dared where others feared. Benifiting probably from higher Muslim population and more flexible or secular poltical regime, Turkey’s participation banks and the government started selling benchmark sukuk (benchmark sukuk is usually above $US500 billion) and now is considered one of the top sukuk issuers globally.

Third development would be that many regulators in Europe embarked on drafting new regulations that will help boost sukuk issuance or Islamic finance in general. I will blog on the regulatory efforts soon.

This is officially my first blog post on sukuk that will hopefully become a weekly or biweekly corner to cover an aspect of the niche industry and will cover both sukuk and Islamic Finance in general.

Stay tuned and stay safe.

Adnan Halawi


Sukuk record year

USD 85 billion sukuk issued in 2011

By Adnan Halawi, Team Leader – Fixed Income, Zawya

USD85bn of sukuk were sold in 2011, an increase of 62% from 2010, writes Adnan Halawi, Zawya’s Fixed Income Analyst, who presents a sukuk timeline for 2011 and pipeline for 2012.


USD 84.4 billion of sukuk were issued in 2011 across the world, an increase of 62% from the USD 52 billion issued in 2010. This made the year the best on record in terms of sukuk issuance according to data compiled by Zawya’s Sukuk Monitor.

Malaysia continued to constitute the main sukuk market worldwide, followed by the GCC, while sovereign issuers were the main drivers of the growth. The global sukuk market now stands at USD 182 billion.

Source: Zawya Sukuk Monitor

Malaysia issued USD 58 billion or 69% of the total followed by GCC countries which issued a combined total of USD 19 billion or 23% of the total. New countries that witnessed sukuk issuance in 2011 were Yemen, Iran and Jordan.  Bahrain managed to maintain a top ranking among sukuk issuers despite all the unrest witnessed in the kingdom, while the UAE managed to climb the rankings from fifth with USD 1 billion in 2010 to third with USD 4.1 billion. Indonesia was the second biggest of issuer of sukuk in Asia.

Source: Zawya Sukuk Monitor

Government institutions continued to be the main issuers of sukuk across the globe with USD 56 billion or 66% of the total. Financial services followed with USD 15 billion or 17.5%.

Currency breakdown remained in favor of the Malaysian ringgit (MYR), which captured a 66% of the total at USD 65 billion. This was followed by the Qatari riyal (QAR), which received support from the huge domestic sukuk issued in January 2011. The US dollar came in third with USD 8.9 billion or 10% of the total, marking a strong comeback for USD-denominated sukuk.

New currencies included the Yemeni riyal (YER), Iranian riyal (IRR), Jordanian dinar (JOD) and Chinese yuan (CNY). The year witnessed an increased tendency for GCC issuers to issue in the Malaysian market.

While sukuk market remained skewed toward domestic markets with USD 75.8 billion or 89% of the total in 2011, there were 14 international sukuk worth USD 8.6 billion, up from 11 worth USD 5 billion in 2010.

Murabaha, Ijara, BBA and Musharaka remained the most used structures followed by Wakala and Istithmar – except that Wakala became a more widely used structure in 2011.

The London Stock Exchange grabbed the biggest number of listed sukuk issued in 2011 with 10 sukuk worth USD 5.1 billion, followed by Bursa Malaysia with five issues worth USD 3.33 billion.

The top sukuk issued in 2011 in terms of size included the QAR 33 billion (USD 9 billion) Qatar Sovereign Sukuk sold in January in the domestic market; Malaysia’s Wakala Global Sukuk with two tranches worth USD 2 billion; Nakheel Sukuk 4; Indonesia Global Sukuk; and SATORP’s sukuk. The last three were worth USD 1 billion each.

Click here to view our Sukuk Yearly Review for the year 2011

Sukuk timeline

What follows is a timeline of the major events and developments that took place in 2011 and which shaped the sukuk industry, some of which are expected to leave their impact and shape the year 2012 as well.

Jan Qatar Central Bank Issues QAR50 Bln Bonds, Sukuks View
Feb Yemen Launches First Sukuk View
Mar First Sukuk Ijara Issues in Iranian Capital Market View
Al-Rajhi Cement – Jordan Issues the First Islamic Sukuk in Jordan View
Turkish Parliament passes tax neutrality law for Sukuk Al-Ijara View
Apr Bahrain Bourse Lists BD 200 million Government Islamic Leasing Sukuk View
May Thai Government Grants Tax Incentives to Boost Capital Market Development View
Jun First short-term sukuk out of Pakistan View
Introduction Of Bank Negara Monetary Notes-Istithmar View
Egypt EFSA’s BOD approved the Proposal of Rules governing Issuing and Trading in Sukuk View
July Saudi Binladin closes Second Short Term Sukuk View
Aug Nakheel launches Dh4.8b sukuk View
Meezan Bank advised the First Ever Islamic Short-term Sukuk in Pakistan View
Sep SATORP pioneers project sukuk for Jubail refinery View
Oct Goldman’s Sukuk Trust Certificate Program View
TAQA establishes MYR 3.5 billion programme View
Khazanah Issues Inaugural Offshore RMB Denominated Sukuk of RMB500 million View
Nov Bahrain prices $750m 2018 Sukuk View
Thomson Reuters launches World’s First Islamic Interbank rate View
The Republic Indonesia prices US$1 Billion REG S/I44A Sukuk due 2018 View
Three likely flaws in Goldman Sach’s milestone sukuk View
Dec South Africa’s National Treasury Invites Proposals for Sukuk View

Besides the abundant issuance in 2011, there were a number of announcements that have created a healthy pipeline for 2012. While some countries managed to change their tax regulations to facilitate sukuk issuance, others initiated the procedures to do so.

Few companies shelved their issuance plans due to unfavorable market conditions and even fewer defaulted on repaying their obligations in 2011. Despite the Arab Spring and the Eurozone debt crisis, we saw a record year of issuance.

Sukuk 2012 Forecasts:

1-      More countries join the club of issuers
2-      New currencies
3-      More cross-border sukuk
4-      Further innovation in structures
5-      More consolidation
6-      More conventional issuers selling Islamic bonds
7-      More project finance sukuk
8-      More short term sukuk
9-      More debates and controversy
10-   More listing, trading and liquidity
11-   More diversification

Source: Zawya Sukuk Monitor

Related Content:

USD 63 bn sukuk issued in first 9 months of 2011
Global Sukuk: Shorter And Wider
Slash Taxes, Spur Sukuk
GCC sukuk roar back
$13.9bn GCC Sukuk maturing by 2012
Sukuk gain where bonds lose in a month of firsts
Sukuk Mondiale
The Rise of Wakala

For more information, please contact the writer:
Adnan Halawi
Team Leader – Fixed Income

© Zawya 2012