Sukuk and Capital Markets

The turn of events in the last few months has demonstrated that with every setback, there comes an opportunity. Despite a dip in issuances and a relatively shaky capital market in the earlier part of the year following uncertainty in the US financial market and concerns over monetary easing, things seem to be picking up as the year draws to a close. The markets are rife with activity as issuers return to the market and this is expected to continue into 2014, with some tempting big ticket items on the menu.

The Islamic capital markets are one of the cornerstones of our industry, and the foundation on which much innovation in the market is built. In this Capital Markets issue of Islamic Finance news Supplements we bring you in-depth analysis from around the world to provide a comprehensive round-up of the latest developments.


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    The ever-evolving Islamic capital markets
    Advancements in regulations around the world to enable the issuance of sovereign and domestic Sukuk issuances and a call for more equity-based products are becoming more prevalent, as we tracks the evolution of the Islamic capital markets so far. From Africa to Europe, governments are becoming more aware of the importance of political will in enabling the creation of a domestic Islamic capital market and mobilization of Shariah-based products.



    Process of Sukuk issuance
    A typical Sukuk issuance does not differ much from a conventional bond issuance except that it involves Shariah advisors and compliance with certain regulatory requirements to render it Shariah compliant. The issuer hires a lead arranger (normally an investment bank) to facilitate the issuance. After conducting a preliminary feasibility study, the issuer then requests for a lead arranger to draft a Sukuk proposal with the necessary terms and conditions; after which the issuer appoints the lead arranger to facilitate the Sukuk issuance following satisfactory proposal meetings.



    Islamic securitization: An overview
    Islamic securitization can be a confusing subject, with the technical aspects underpinning the structures often lost among the wider issues of Shariah compliance and the media attention on the Islamic nature of the instruments. In addition some instruments, including some Sukuk issuances, are mis-categorized as securitizations due to a lack of understanding of the process behind the structuring.

    Islamic loans: What’s the deal
    There is an obvious chasm between the Islamic finance loan market and Sukuk market in terms of geographical distribution. Islamic Finance news explores the gap. According to data by Dealogic, the Islamic loan market is currently dominated by the Middle East, with the UAE, Saudi Arabia and Turkey leading the global league table for the last 12 months..



    [[nodetitle:Barwa Bank at the forefront]]
    Islamic banking in Qatar and the GCC continues to grow strongly, a trend expected to continue into the medium and long term as the industry builds out product and service propositions that offer credible alternatives to conventional banking. Well positioned to lead this growth trend is Barwa Bank, the newest and fastest growing Shariah compliant bank in Qatar

    [[nodetitle:KLRCA’s new i-Arbitration rules: Islamic finance in the global commercial arena]]
    This is the second in a three-part series looking at the settlement of disputes in Islamic banking through commercial arbitration and the KLRCA’s new i-Arbitration Rules (the Rules). The first paper, published last month in the Islamic Finance news Asia Supplement, examined the problems faced by Islamic finance users pertaining to dispute resolution and the role that the KLRCA and i-Arbitration Rules will play in providing solutions to those problems..

    Fulfilling Industry needs
    Leading up to the end of the year, many have predicted that the Islamic capital markets, particularly in the Sukuk issuance space, will not reach the record highs of 2012. Islamic Finance news gains a perspective on the current state of play in the Islamic capital markets from Ahsan Ali, the managing director and global head of Islamic origination at Standard Chartered in Dubai. 

    Global sukuk market to withstand bond market volatility
    As a result of the global financial crisis and ensuing recession in the US, and in keeping with its mandate to achieve maximum employment, the US Federal Reserve (Fed), responded by setting short-term interest rates to a near zero. The Fed also began purchasing vast quantities of US Treasuries and mortgage-backed securities, a process referred to as quantitative easing (QE).

Friday, 01 November 2013