With a total of $1.2 billion medium to long term sukuk issued, the Central Bank of Bahrain (CBB) remains active in the sovereign sukuk (Islamic bond) market, a senior central bank official stated yesterday.
CBB Executive Director of Financial Institutions Supervision Abdul Rahman Al Baker also said this was complemented by a regular programme of short term issuance and the CBB has also successfully issued a five-year maturity Islamic Leasing Sukuk in the local market with a value of BD200 million.
Mr. Al Baker was speaking during the opening of the 8th Annual World Islamic Funds and Capital Markets Conference. Talking to DT, the CBB official said, "It was estimated that the global sukuk market exceeded $200bn by the end of first quarter of this year. Sukuk issuance in the period reached a record $43bn globally - almost double the average amount of sukuk issued in any given quarter in the past year, and represents half the total amounts of sukuk issued throughout 2011." He added, "The revival in the markets was due mainly to gradual recovery of global economy and investors' sentiment which drives the demand for sukuk." Last November, the Kingdom, drew $1.8bn in demand for its $750m, seven-year sukuk, its first sovereign issue since March 2010, pricing it at an yield of 6.273pc.
Asked about the regulator's thrust area, Mr. Al Baker said, the CBB, through enabling legislation, is actively promoting the development of new products for investors in both Islamic and traditional finance, while at the same time providing credible regulation in both areas.
Citing the recently updated Volume 7 Rulebook, the official said it expands the variety of funds that can be established in Bahrain, by introducing rules governing Real Estate Investment Trusts (REITs) and Private Investment Undertakings (PIUs). PIUs are new breed of mutual funds with a high degree of flexibility in structuring, aimed basically to facilitate private investments, the like of a family held investment, single investor or a single investment type. Due to the investment risk characteristics it may exhibit, such type of scheme can only be initiated to High Net-Worth Individuals and institutional investors.
According to him, in Bahrain, the mutual funds industry is one of the fastest growing segments of the overall financial sector. "With around $9bn in assets under management, through more than 2,700 funds, the industry has been growing at an annual average of about 15pc in recent years. Overall, there are 100 Islamic funds incorporated and registered in Bahrain with total assets of $1.7bn as of March 2012," Mr. Al Baker said.
