Islamic bond market set to grow

IFIS, the first professional strength information service designed to meet the unique requirements of Sharia compliant finance industry participants, has released 2005 half year results for its global coverage of the Islamic bond market. 

"IFIS embodies the type of services that is essential for the continued development of the Islamic financial market globally. The IFIS Islamic league tables would serve as a guide to all users of Islamic finance as to who's who and leaders in the market. I commend and congratulate Euromoney for their successful launch of the Islamic League Tables.", said Badlisyah Abdul Ghani, Head of Malaysia's CIMB Islamic, the Islamic finance franchise of the biggest investment banking group in South East Asia.

According to IFIS Analysts, the Islamic bond market for 1Q 2005 was $1.08 billion with 12 issues. The market has since grown in Q2 to $6.2 billion with 26 issues marking a 474% increase over the previous period.

At year end 2004, the Islamic bond market size was US$6.7 billion.  “At this pace we expect 33% market growth in this sector by the end of 2005”, said IFIS Product Manager, Rakiya Sanusi.

“There appears to be a robust pipeline for the balance of 2005” said IFIS Product Manager, Rakiya Sanusi.

Arcapita’s US$200 Million sukuk which has been fully underwritten by Standard Bank and West LB AG is expected to be issued by mid July. The 5-year multicurrency murabaha-backed sukuk may be denominated in US dollars, Euros and Pound Sterling.

ABC Islamic Bank have launched and are currently marketing the Al Dar Investment US$ 50 Million Sukuk issue. Once issued it is said to be the first fully private sector Musharaka sukuk.

SABIC, Saudi Arabia have announced an Islamic bond that will be denominated in Saudi Riyal, and will be marketed in Saudi Arabia. HSBC Amanah are advisers.

Many of the International bonds issued to date have been oversubscribed due to high demand.  According to Iqbal Khan, CEO HSBC Amanah, “The Sukuk market has seen encouraging growth this year in terms of number as well as total value of transactions. We are seeing a lot more corporates, particularly from the GCC, turning to the Sukuk market for their financing needs. We believe there will be exponential growth in this segment of the market over the next five years and HSBC Amanah is committed to playing a significant part in this growth.”