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MENAFN - Khaleej Times - 05/02/2014

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(MENAFN - Khaleej Times) The World Expo 2020 is expected to leave a positive impact on sukuk issuance in the UAE and particularly in Dubai, according to an industry specialist.

The UAE maintained a spot among world's top issuers despite the credit crunch and global financial crisis. Private sector credit growth in the country is expected to accelerate between 2014 to 2020, Zawya's Adnan Halawi said in his address to the Sukuk Congress Mena in Dubai.

Historically, the UAE is still the largest issuer in Mena with 76 issues worth 49.46 billion followed by Saudi Arabia totalling 70 sukuks of 46.5 billion while Qatar ranked third with 24 issues of 23.79 billion. Mena accounts for 30 per cent of outstanding global sukuk market with 80 billion compared to 270 billion globally. During the last five years, sukuk value and volume witnessed upward trend but plunged in 2013.

The reason for decline was mostly driven by US Fed idea of tapering its stimulus package in May 2013 sending bonds yields up around the world, and making it less attractive to issue debt. Halawi mentioned the region used to be more than 50 per cent of global sukuk issuance in 2006, but came down to 23 per cent in 2013. "There are reasons and region needs to address those reasons," he added. Sukuk issuance grew from 22 billion in 2006 to 133 billion in 2012.

Saudi Arabia managed to become the world's second largest issuer of sukuk. In the region the Saudi Arabia leads with 37.65 billion followed by UAE 24.20 billion and Qatar at third position with 13.56 billion.

In 2013, only Mena's GCC states sold sukuk. Saudi Arabia led with 20 issuance worth 15.215 billion followed by UAE's 13 sukuks of 7.12 billion and Qatar's nine of 2.35 billion. In Mena region, government institutions ranked top in sector followed by financial services, real estate, transport, power and utilities, and oil and gas. Halawi said oil and gas sector has big potential.

 






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