Unicorn, StanChart win $6bn sukuk bid

Two banks – Unicorn Investment Bank and Standard Chartered – have won new mandates to issue Islamic bonds (sukuk) worth nearly $6 billion (Dh22bn) this year.

Bahrain's Unicorn Investment Bank has won the mandate to issue two sukuk worth around $1.5bn during the third quarter of this year.

"One issuer is a government entity and one is quasi government," Nida Raza, senior vice-president, capital markets at Unicorn Investment Bank said on the sidelines of a conference in Dubai yesterday.

"Those are the type of bonds that will attract global capital. Sukuk is not anymore a GCC phenomenon," she said.

Raza expects the market to pick up around the end of the third quarter. "Markets will not return until the Dubai World negotiations with creditors comes to a conclusion and Investment Dar resolves its problems," she said.

Investor education, mainly for conventional ones in the United States, is a key to liven up the sukuk market, she said.

Unicorn is also working on a $250 million Islamic debt offering for a US company, a bank official said.

The Bahrain-based lender plans to finalise the sale for the US company "soon", Nida said in Dubai yesterday, without identifying the issuer. The bank has about $4.5bn of Islamic debt sales in the pipeline this year, Raza said.

Standard Chartered plans to arrange more than $4bn worth of sukuk globally this year exceeding last year's figures as confidence and liquidity return to credit markets, a senior executive said.

"We arranged more than $4bn of sukuk last year. We hope to beat last year's figures," Ahsan Ali, head of Islamic origination at Standard Chartered said in an interview on the sidelines of a conference in Dubai. "Issuers of Islamic bonds will take advantage of better market conditions and levels of liquidity," he added.

Total global sukuk issuance stood at $11.1bn at the end of August, a 20 per cent drop from $14bn during the same period last year, data from Zawya Sukuk Monitor shows. Ali believes the outlook for Islamic finance remains strong.

"The sukuk markets will pick up in the coming months. However, governments need to give the Islamic finance industry a stronger framework which could be common around the GCC," said Mohammed Dawood, Director Capital Markets, HSBC Amanah.

"There is a shift towards local currency syndication for corporate issuances or finances. However, authorities need to develop a deep local currency market. It is also witnessed that sukuk growth has been higher in the overall industry," said Ahsan Ali.

Global sales of dollar-denominated Islamic bonds may reach $5bn this year, matching levels of 2009, according to Dawood.

The so-called sukuk market was "sluggish" in first half of the year, Dawood said in an interview. Offerings will "pick up" in the months to come as market conditions improve, he said.

Sales of Islamic bonds, including domestic issues, reached $4.6bn this year, after rising to $20.2bn in 2009, according to data compiled by Bloomberg. Standard & Poor's said total sales of the securities may rise to $30bn in 2010, approaching the record set in 2007. (With inputs from agencies)

$120m Murabaha facility for Noor

Bank Sarasin-Alpen (ME) arranged a $120 million Murabaha financing facility for Noor Islamic Bank to fund the Islamic bank's future investments and balance sheet management.

Hussain Al Qemzi, Group Chief Executive, Noor Islamic Bank, said: "We are pleased to have concluded this finance facility with Bank Sarasin and Alpen Capital. We look forward to working with them in other areas where their value added services would benefit our institution, our customers as well as our stakeholders."

Fidelis M Goetz, Head of Private Banking, Bank Sarasin, said: "We look forward to concluding many more Islamic finance transactions in the region."

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