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Alhuda CIBE - Global Sukuk Market, Advantages and Future.


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Alhuda CIBE - Global Sukuk Market, Advantages and Future.

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Alhuda CIBE - Global Sukuk Market, Advantages and Future.

  1. 1. Global Sukuk Market: Advantages, Requirements & Future Prospects IIFM Islamic Financial Markets Conference Manama – 16 May 2005
  2. 2. Advantages of Sukuk issuance ♦ Diversify funding source ♦ Create and enhance profile in international market ♦ Pricing benchmark ♦ Secondary liquidity ♦ Sizeable financing – yet small enough denominations ♦ Ease of clearing and settlement
  3. 3. Advantages for a Sukuk Investor ♦ Diversify Investment ♦ Provides Leveraging Capabilities ♦ Secondary Market Liquidity ♦ Ease of clearing and Settlement ♦ Investment available to Institutional and Retail investors ♦ Allows for many computation of Risk – Credit / Mkt / duration etc
  4. 4. Requirements for developing the Sukuk market ♦ Sovereign issuers ♦ Corporates ♦ Rating --- Credit profile - ♦ Maturity profile ♦ Return profiles ♦ Secondary liquidity ♦ Repo market — Fixed — Floating — Lead managers’ commitment and responsibility — Issue size — Finance position — Yield curve play — Credit play — Management of Liquidity
  5. 5. Future prospects for Sukuk We have only begun to tap the surface of the global Sukuk market. The potential that exists are enormous as along as we maintain international standards ♦ Islamic banks will become prominent borrowers like their conventional counterparts ♦ Project finance sukuk ♦ Asset-backed sukuk ♦ Mortgage-backed sukuk ♦ Convertible/exchangeable sukuk ♦ EMTS program ♦ Development of hedging products
  6. 6. Future prospects: final remarks ♦ It is clear that the supply side will be quite robust. The challenge for Islamic financial institutions is to develop the following three strategic areas: — Trading capabilities — Sell-down to private and retail clients — International repo capabilities
  7. 7. Ismail Dadabhoy Head of Institutional Banking Noriba Bank (BSC) (c) Thank you