Qatar's Barwa Bank looking for a bigger slice of Islamic finance market

Qatari lender Barwa Bank plans to seek a credit rating in the second half before a possible sukuk sale.

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Barwa Bank, the Qatari lender that became one of the top 10 underwriters of Arabian Gulf Islamic bonds within three years of opening, plans to seek a credit rating in the second half before a possible sukuk sale.

Qatar's smallest Islamic bank helped issuers including the Qatar, Dubai and Turkish governments sell sukuk last year, as sales in the region tripled, according to the lender's data. Barwa Bank arranged US$863 million of notes in 2012, just behind QInvest, a unit of Qatar Islamic Bank, the nation's biggest Sharia-compliant lender by assets, data compiled by Bloomberg show. That made it the eighth-biggest underwriter out of 25 for Gulf Cooperation Council sukuk.

"We felt there wasn't really a regional Islamic bank trying to make the weather in that sukuk space," Barwa Bank chief executive Steve Troop said. "There was a space for an institutional Islamic bank that could focus on that."

Barwa Bank has been mandated for two Sharia-compliant bond offerings this quarter involving issuers based outside of Qatar, according to Mr Troop, who declined to give details. The lender, which complies with Islamic banking rules, is considering its own issuance after borrowing costs tumbled in the past year. Issuers in Qatar doubled sales to $10 billion in 2012, according to data compiled by Bloomberg.

The region's issuers have not been turned off by Barwa's small size, Mr Troop said. In addition to sovereign clients, Barwa helped Dubai-based Emaar Properties and Abu Dhabi Islamic Bank sell Islamic notes in 2012, the bank said.

The lender had assets of 21.5bn Qatari riyals at the end of June, about a 15th the size of Qatar National Bank, the Middle East's biggest lender, and a quarter the regional average, data compiled by Bloomberg show.

"It's not necessarily about being the biggest," Mr Troop said. "It's quite clear there is continuing appetite for sukuk among investors."

Sales of Islamic notes in the six-nation GCC, which includes Saudi Arabia, tripled to $21bn in 2012, and Gulf issuance is set to surge 64 per cent this year to as much as $35bn in 2013, HSBC Holdings's Islamic banking unit said February 7.

HSBC was the world's biggest sukuk underwriter last year, arranging $11 billion, or almost a quarter of the total, according to data compiled by Bloomberg.

* Bloomberg News