(MENAFN- Khaleej Times) In meetings with potential issuers and financial firms in Abu Dhabi and Dubai on Monday and Tuesday, the Securities and Commodities Authority (SCA) outlined rules designed to make it faster and cheaper for companies to issue conventional and Islamic bonds, and easier for investors to trade them.
"We would like to see more active bond and sukuk markets - we would like to see more listing, more trading," Mounther Barakat, senior research adviser at the SCA, said in Dubai on Tuesday.
If successful, the project could help to reshape corporate financing in the UAE. At present, firms rely heavily on bank loans and to a lesser extent retained earnings; local currency bond issuance is minimal, and usually only the biggest companies can afford to issue bonds in the international market.
This slows the UAE's efforts to diversify its economy beyond oil and could increase risks in the banking system by making banks, rather than a broad pool of investors, bear the bulk of exposure to corporate debt.
The new rules, which do not apply to issues by government bodies or state-owned companies, set a minimum issue size of just Dh10 million ($2.7 million), down from a previous floor of Dh50 million.
The SCA said it would shorten the time it took to review and approve issuance applications to five days, while private placements of bonds not listed on the UAE's securities exchanges would not need SCA approval.
Issuers of bonds and sukuk now only need to make financial statements annually, instead of quarterly, and issuers no longer need to obtain credit ratings from rating agencies - potentially removing a major expense for them.
The rules do not attempt to drive trading onto exchanges as they allow off-market dealings in listed bonds and sukuk, as long as the trades are registered.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.