Qatar's sale of a US$4 billion (Dh14.69bn) sukuk has made this year the Arabian Gulf's best ever for sales of Islamic bonds - with five and a half months still to go until the end of the year.
Investment banks have funnelled cheap credit towards the Gulf in an effort to make up for declining fee income and maintain relationships with big corporate clients.
Gulf borrowers have raised $17.4bn this year, led by sovereign sukuk sales from Saudi Arabia, Qatar and Dubai, according to Bloomberg data.
That figure eclipses the $16.1bn raised in 2007, the next-highest year on record. In both years, a total of 23 deals took place.
Qatar's sukuk sale followed high levels of demand for other highly rated Gulf sovereign bonds and generated a huge order book, reported by Reuters to be in excess of $24bn.
"Globally, there's a scarcity of interesting assets to invest in," said Neil Miller, the global head of Islamic finance at KPMG. "Most of the demand is from regional investors, who are supporting their own jurisdiction … Investors are still bullish about the prospects for the region."
But the bigger numbers of sukuk sales also reflected a lack of access to other sources of finance, Mr Miller added.
Gulf borrowers raised $7.3bn in funding through Islamic bonds last year, the data shows, with deal volumes sapped as the effects of the Arab Spring reduced investor appetite for Middle Eastern assets and cash-strapped European banks proved hard to tap for funding.
Banks broke the impasse by raising funding for Islamic bond sales from large institutional investors in the Gulf and South East Asia that have been starved of Sharia-compliant assets in which to invest.
But the high levels of debt being issued have thrown a lifeline to investment bankers in Dubai who have seen mergers and acquisitions dwindle and equity markets all but dry up.
Syndicated loans to companies - formerly the most common method through which European banks funded projects in the region - have fallen to their lowest levels in a decade as a result of strained bank balance sheets.
Meanwhile, initial public offerings have struggled to get off the ground in the UAE as a result of poor liquidity on local markets.
At the same time, banks have competed hard for deals by undercutting each other on fees, leading them to increase the volume of sukuk sales to compromise.
"It's pretty competitive. There's not tons of deals around in the conventional markets, and a lot of the banks want to be in on the transactions. Their relationships have to be managed," said Debashis Dey, a partner at the law firm Clifford Chance. "They're going to try to stay in the market while the market's hot, which may mean undercutting each other on fees."
Investment banks may be using large sales from Gulf governments as loss leaders to ensure they can retain other business, analysts said.
Investment banks' fee income from deals across the Middle East during the first half of the year rose 5 per cent to $234.8 million, compared with the corresponding period a year earlier, according to data from Thomson Reuters.
But following the surge in debt sales, fees for bond and sukuk deals during the first half of this year more than doubled to $54.9m, compared with $25.1m during the same period last year.
The value of bonds and sukuk outstanding issued by borrowers in the UAE is at the highest level in the country's history, according to the Bank for International Settlements.
[ ghunter@thenational.ae ]
MEDIEVIL (1998)
Developer: SCE Studio Cambridge
Publisher: Sony Computer Entertainment
Console: PlayStation, PlayStation 4 and 5
Rating: 3.5/5
Company Profile
Name: Direct Debit System
Started: Sept 2017
Based: UAE with a subsidiary in the UK
Industry: FinTech
Funding: Undisclosed
Investors: Elaine Jones
Number of employees: 8
MATCH INFO
Manchester City 4 (Gundogan 8' (P), Bernardo Silva 19', Jesus 72', 75')
Fulham 0
Red cards: Tim Ream (Fulham)
Man of the Match: Gabriel Jesus (Manchester City)
UAE cricketers abroad
Sid Jhurani is not the first cricketer from the UAE to go to the UK to try his luck.
Rameez Shahzad Played alongside Ben Stokes and Liam Plunkett in Durham while he was studying there. He also played club cricket as an overseas professional, but his time in the UK stunted his UAE career. The batsman went a decade without playing for the national team.
Yodhin Punja The seam bowler was named in the UAE’s extended World Cup squad in 2015 despite being just 15 at the time. He made his senior UAE debut aged 16, and subsequently took up a scholarship at Claremont High School in the south of England.
Western Clubs Champions League:
- Friday, Sep 8 - Abu Dhabi Harlequins v Bahrain
- Friday, Sep 15 – Kandy v Abu Dhabi Harlequins
- Friday, Sep 22 – Kandy v Bahrain
Herc's Adventures
Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5
SPECS
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
ROUTE TO TITLE
Round 1: Beat Leolia Jeanjean 6-1, 6-2
Round 2: Beat Naomi Osaka 7-6, 1-6, 7-5
Round 3: Beat Marie Bouzkova 6-4, 6-2
Round 4: Beat Anastasia Potapova 6-0, 6-0
Quarter-final: Beat Marketa Vondrousova 6-0, 6-2
Semi-final: Beat Coco Gauff 6-2, 6-4
Final: Beat Jasmine Paolini 6-2, 6-2
Company Profile
Name: Raha
Started: 2022
Based: Kuwait/Saudi
Industry: Tech Logistics
Funding: $14 million
Investors: Soor Capital, eWTP Arabia Capital, Aujan Enterprises, Nox Management, Cedar Mundi Ventures
Number of employees: 166
Kill
Director: Nikhil Nagesh Bhat
Starring: Lakshya, Tanya Maniktala, Ashish Vidyarthi, Harsh Chhaya, Raghav Juyal
Rating: 4.5/5
Sarfira
Director: Sudha Kongara Prasad
Starring: Akshay Kumar, Radhika Madan, Paresh Rawal
Rating: 2/5
FINAL SCORES
Fujairah 130 for 8 in 20 overs
(Sandy Sandeep 29, Hamdan Tahir 26 no, Umair Ali 2-15)
Sharjah 131 for 8 in 19.3 overs
(Kashif Daud 51, Umair Ali 20, Rohan Mustafa 2-17, Sabir Rao 2-26)
COMPANY PROFILE
Company name: Klipit
Started: 2022
Founders: Venkat Reddy, Mohammed Al Bulooki, Bilal Merchant, Asif Ahmed, Ovais Merchant
Based: Dubai, UAE
Industry: Digital receipts, finance, blockchain
Funding: $4 million
Investors: Privately/self-funded
MATCH INFO
Manchester United 1 (Rashford 36')
Liverpool 1 (Lallana 84')
Man of the match: Marcus Rashford (Manchester United)
The specs
Price: From Dh180,000 (estimate)
Engine: 2.0-litre turbocharged and supercharged in-line four-cylinder
Transmission: Eight-speed automatic
Power: 320hp @ 5,700rpm
Torque: 400Nm @ 2,200rpm
Fuel economy, combined: 9.7L / 100km
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
WHY AAYAN IS 'PERFECT EXAMPLE'
David White might be new to the country, but he has clearly already built up an affinity with the place.
After the UAE shocked Pakistan in the semi-final of the Under 19 Asia Cup last month, White was hugged on the field by Aayan Khan, the team’s captain.
White suggests that was more a sign of Aayan’s amiability than anything else. But he believes the young all-rounder, who was part of the winning Gulf Giants team last year, is just the sort of player the country should be seeking to produce via the ILT20.
“He is a delightful young man,” White said. “He played in the competition last year at 17, and look at his development from there till now, and where he is representing the UAE.
“He was influential in the U19 team which beat Pakistan. He is the perfect example of what we are all trying to achieve here.
“It is about the development of players who are going to represent the UAE and go on to help make UAE a force in world cricket.”
MATCH INFO
First Test at Barbados
West Indies won by 381 runs
Second Test at Antigua
West Indies won by 10 wickets
Third Test at St Lucia
February 9-13