Mena sukuk issues fall 80% in Q2

The total value of Islamic bond, or sukuk, issues in the Middle East and North Africa (Mena) in the second quarter of this year plummeted by more than 80 per cent on-year to $1.064 billion (Dh3.6bn) but is expected to pick up in the latter half of 2009 as a couple of large issuances are expected, research released yesterday showed. The drop in Mena sukuk was larger than the 35 per cent on-year fall in global sukuk value to $5.283bn in Q2-2009. However, the value of sukuk issued outside the Mena overall increased by almost 54 per cent to $4.219bn, led mainly by the $3.178bn raised by 11 Malaysian issuers in the period, data compiled by business intelligence portal Zawya showed. The global value of sukuk issued in Q2-2009 was 164 per cent higher compared to the previous quarter, indicating an acceleration in the market as the appetite for paper increases worldwide. Mena sukuk issuance is expected to pick up with the Saudi Electricity Company (SEC) and Ras Al Khaimah Investment Authority (Rakia) bonds in the pipeline. SEC received more than three times the amount sought in its SR7bn sukuk sale. The five-year Islamic bonds are priced to yield 160 basis points over the Saudi interbank rate. Rakia is expected to issue its sovereign-backed Sukuk II worth between $400 million and $500m this year. Other sukuk from the region are expected from Emaar, Abu Dhabi Islamic Bank and Islamic Development Bank. The largest sukuk to be issued in the second quarter was a 30-year Murabaha instrument valued at $1.4bn (but issued in Malaysian ringgit) by the Terengganu Investment Authority, Zawya data showed. CBB International from Bahrain followed with a five-year Ijara instrument worth $750m, issued last month. In the currency in which the Islamic bonds were issued in the last quarter, the Malaysian ringgit led the way, followed by US dollar and others, the data showed. Sovereign and government institutions were the largest issuers, followed by the financial services. Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here .