ETA Star defers $500m sukuk

Dubai-based ETA Star Holding has deferred plans to launch a $500 million (Dh1.84bn) sukuk issue that it was planning this year, said an official close to the deal.

"We are not in need of any external funding, as we have enough cash. Moreover, market conditions are also not favourable," he told Emirates Business. He did not say when the sukuk plan will be reinitiated.

The company had earlier announced plans to sell Dh1.84bn of sukuk to finance and expand its property business.

"Currently, we are financing the projects through pre-sales, project finance and our own funds. Now, we plan to raise funds through sukuks and are holding talks with a consortium of banks," Arif B Rahman, Group Director Finance, ETA Ascon, had told Emirates Business last year.

Half of the sukuk money was to be used to develop the property business, while the remaining was to diverted to expand other group activities, he had said.

An estimated $10bn of Islamic issues have been delayed by the dislocation in credit markets sparked by the US sub-prime mortgage crisis, including Qatar Steel Company's $1.3bn refinancing deal and Emirates Aluminium's $2bn bond sale. Nakheel recently said it has received bids of 17 per cent more than the $980m of Islamic bonds it offered in May.

According to Ernst & Young, the issuance of sukuks is likely to double to $100bn this year, thanks to higher take-up of Shariah-compliant financial products among Middle East investors. The sum of Islamic assets has been growing at over 20 per cent a year and reached $900bn in 2007. It is set to hit $2trn by 2010, the firm said.

Meanwhile, London-based Islamic Finance Information Service said the global sukuk market, which set off in 2002, reached a record market value of $51.5bn in 2007, up 90 per cent from $27.2bn in 2006.