The moderate growth in sukuk issuances in the first quarter underpins continued investor interest, but it also points out to structural constraints, inhibiting faster uptake of Islamic bonds as an asset class, according to Fitch Ratings.
The total volume of sukuk rated by Fitch for the three-month period through to March end, stood at $80 billion (Dh294bn), a 6 per cent rise from the figures recorded at the of 2017, the rating agency said in a report released on Tuesday. New sukuk issuance with a maturity of more than 18 months from the Arabian Gulf states, Malaysia, Indonesia, Turkey and Pakistan came in at $14.9bn for the first quarter of 2018, a modest 1 per cent year-on-year rise.
“Seasonal patterns will affect quarterly issuance, which may pick up in the second half of the year following Ramadan and the summer break,” Fitch noted. “If the first quarter rates of growth are broadly maintained over the course of 2018, the annual increase in outstanding volumes would be broadly consistent with that seen in recent years.”
The issuances during the first quarter of 2018 were largely driven by the GCC region, whose funding needs are likely to fall if oil prices stay high. The sovereigns, though, may choose to issue more Islamic bonds as part of their efforts to deepen their local debt markets and diversify funding sources for themselves and the corporate borrowers in the region.
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Read More:
[ Dana Gas reaches agreement on $700m sukuk restructuring ]
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Corporate borrowers, financial institutions, government related entities and sovereigns in the region have increasingly looked at tapping the sukuk market for their funding needs in the recent quarter and more are lined up to test the markets this year.
Saudi Arabia, the region’s biggest economy and the world’s top oil exporter, is poised to raise funds by selling sharia-compliant bonds as soon as the market conditions allow, Reuters cited the head of kingdom’s Debt Management Office Fahad Al Saif as saying in March. The kingdom last year raised $9bn through sovereign sukuk issuances.
Issuer funding needs and investor appetite for the remainder of the year will, however, be determined by factors including oil prices and tighter global financing conditions. Investor sentiment may also be vulnerable to geo-political tensions in the Middle East and the pace of US monetary policy tightening, according to Fitch.
Although Islamic bond issuances remain on upward trajectory, standardisation in the industry remains a significant challenge, which has crimped the rate of expansion for sukuk as an asset class, Fitch noted.
“We think that structural constraints mean growth may be steady but
unspectacular,” it said. “Greater standardisation …. would help sukuk gain wider acceptance among international investors, especially if it helped set out rights and obligations in all circumstances.”
The challenges facing sukuk as an asset class, which include the potential for variations in interpretation of sharia principals and a lack of legal precedent, were highlighted by Sharjah energy firm Dana Gas's attempt to have its mudaraba sukuk declared unlawful on the grounds that it is not sharia-compliant, Fitch said.
The company earlier this month said it had reached an agreement with the ad-hoc committee of sukukholders on a restructuring and refinancing offer for its $700 million sukuk, subject to the consent of shareholders and sukukholders.
FIXTURES
Thu Mar 15 – West Indies v Afghanistan, UAE v Scotland
Fri Mar 16 – Ireland v Zimbabwe
Sun Mar 18 – Ireland v Scotland
Mon Mar 19 – West Indies v Zimbabwe
Tue Mar 20 – UAE v Afghanistan
Wed Mar 21 – West Indies v Scotland
Thu Mar 22 – UAE v Zimbabwe
Fri Mar 23 – Ireland v Afghanistan
The top two teams qualify for the World Cup
Classification matches
The top-placed side out of Papua New Guinea, Hong Kong or Nepal will be granted one-day international status. UAE and Scotland have already won ODI status, having qualified for the Super Six.
Thu Mar 15 – Netherlands v Hong Kong, PNG v Nepal
Sat Mar 17 – 7th-8th place playoff, 9th-10th place play-off
Results
2.30pm: Dubai Creek Tower – Handicap (PA) Dh40,000 (Dirt) 1,200m; Winner: Marmara Xm, Gary Sanchez (jockey), Abdelkhir Adam (trainer)
3pm: Al Yasmeen – Maiden (PA) Dh40,000 (D) 1,700m; Winner: AS Hajez, Jesus Rosales, Khalifa Al Neyadi
3.30pm: Al Ferdous – Maiden (PA) Dh40,000 (D) 1,700m; Winner: Soukainah, Sebastien Martino, Jean-Claude Pecout
4pm: The Crown Prince Of Sharjah – Prestige (PA) Dh200,000 (D) 1,200m; Winner: AF Thayer, Ray Dawson, Ernst Oertel
4.30pm: Sheikh Ahmed bin Rashid Al Maktoum Cup – Handicap (TB) Dh200,000 (D) 2,000m; Winner: George Villiers, Antonio Fresu, Bhupat Seemar
5pm: Palma Spring – Handicap (PA) Dh40,000 (D) 2,000m; Winner: Es Abu Mousa, Antonio Fresu, Abubakar Daud
Profile Box
Company/date started: 2015
Founder/CEO: Mohammed Toraif
Based: Manama, Bahrain
Sector: Sales, Technology, Conservation
Size: (employees/revenue) 4/ 5,000 downloads
Stage: 1 ($100,000)
Investors: Two first-round investors including, 500 Startups, Fawaz Al Gosaibi Holding (Saudi Arabia)
Company Profile
Company: Astra Tech
Started: March 2022
Based: Dubai
Founder: Abdallah Abu Sheikh
Industry: technology investment and development
Funding size: $500m
The five pillars of Islam
The specs: 2018 BMW R nineT Scrambler
Price, base / as tested Dh57,000
Engine 1,170cc air/oil-cooled flat twin four-stroke engine
Transmission Six-speed gearbox
Power 110hp) @ 7,750rpm
Torque 116Nm @ 6,000rpm
Fuel economy, combined 5.3L / 100km
SCORES
Yorkshire Vikings 144-1 in 12.5 overs
(Tom Kohler 72 not out, Harry Broook 42 not out)
bt Hobart Hurricanes 140-7 in 20 overs
(Caleb Jewell 38, Sean Willis 35, Karl Carver 2-29, Josh Shaw 2-39)
TWISTERS
Director:+Lee+Isaac+Chung
Starring:+Glen+Powell,+Daisy+Edgar-Jones,+Anthony+Ramos
Rating:+2.5/5
More on animal trafficking
DEADPOOL & WOLVERINE
Starring: Ryan Reynolds, Hugh Jackman, Emma Corrin
Director: Shawn Levy
Rating: 2.5/5
Results:
6.30pm: Handicap (Turf) | US$175,000 2,410m | Winner: Bin Battuta, Christophe Soumillon (jockey), Saeed bin Suroor (trainer)
7.05pm: UAE 1000 Guineas Trial Conditions (Dirt) | $100,000 | 1,400m | Winner: Al Hayette, Fabrice Veron, Ismail Mohammed
7.40pm: Handicap (T) | $145,000 | 1,000m | Winner: Faatinah, Jim Crowley, David Hayes
8.15pm: Dubawi Stakes Group 3 (D) | $200,000 | 1,200m | Winner: Raven’s Corner, Richard Mullen, Satish Seemar
8.50pm: Singspiel Stakes Group 3 (T) | $200,000 | 1,800m | Winner: Dream Castle, Christophe Soumillon, Saeed bin Suroor
9.25pm: Handicap (T) | $175,000 | 1,400m | Winner: Another Batt, Connor Beasley, George Scott
PREMIER LEAGUE FIXTURES
Saturday (UAE kick-off times)
Watford v Leicester City (3.30pm)
Brighton v Arsenal (6pm)
West Ham v Wolves (8.30pm)
Bournemouth v Crystal Palace (10.45pm)
Sunday
Newcastle United v Sheffield United (5pm)
Aston Villa v Chelsea (7.15pm)
Everton v Liverpool (10pm)
Monday
Manchester City v Burnley (11pm)
COMPANY PROFILE
Name: Haltia.ai
Started: 2023
Co-founders: Arto Bendiken and Talal Thabet
Based: Dubai, UAE
Industry: AI
Number of employees: 41
Funding: About $1.7 million
Investors: Self, family and friends
UAE currency: the story behind the money in your pockets
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
The five pillars of Islam
Bob Honey Who Just Do Stuff
By Sean Penn
Simon & Schuster
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
The new Turing Test
The Coffee Test
A machine is required to enter an average American home and figure out how to make coffee: find the coffee machine, find the coffee, add water, find a mug and brew the coffee by pushing the proper buttons.
Proposed by Steve Wozniak, Apple co-founder
MATCH INFO
Uefa Champions League quarter-final, second leg (first-leg score)
Porto (0) v Liverpool (2), Wednesday, 11pm UAE
Match is on BeIN Sports