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Islamic bonds, conventional bonds issuances pick up in Mideast

Xinhua, May 29, 2016 Adjust font size:

A number of well established corporations in the United Arab Emirates (UAE), along with two Middle Eastern sovereign issuers have in recent weeks successfully tapped regional debt markets and Sharia-compliant financing segments.

Earlier on Sunday, Dubai Ports (DP) World, the third biggest maritime port operator in the world in relation to assets, said in an e-mailed statement it has it has raised 1.2 billion U.S. dollars in a new seven-year Islamic bond (sukuk) set to be listed on NASDAQ Dubai, the Middle East's international financial exchange.

"The issue received strong investor interest and was two times oversubscribed, receiving more than two billion dollars in bids," said DP World in the statement.

"The strong demand for our new sukuk is a clear sign of support for the economic fundamentals of Dubai and the UAE, and a positive outlook on DP World's growth trajectory and credit ratings," said Sultan Ahmed bin Sulayem, Group Chairman and Chief Executive Officer, DP World.

Other corporations in the UAE have been likewise successful in tapping huge financing sources at capital markets.

Earlier last week on May 23, Dubai-based Islamic bank Emirates Islamic announced that it raised 750 million dollars from a five-year sukuk based on its 2.5 billion dollars certificate issuance program, local daily Emirates 24/7 reported.

Set to be listed on Nasdaq Dubai and the Irish Stock Exchange, the Islamic bond received "overwhelming investor interest" from across the globe and marked Emirates Islamic's return to the international debt capital markets after a period of four years, the report said.

Sukuk do not pay interest as interest is forbidden under Islamic law, but distribute a periodic pay-out to investors based on the Islamic bond underlying which must be a tangible asset such as real estate or commodities, but never a pure cash-flow.

Rivaling Sharia-compliant Noor Bank also launched a 500 million dollars sukuk issue with a maturity of five years on May 24.

On a sovereign level, Qatar sold nine billion dollars of bonds in three maturities last week, said Dubai-based independent economist Dr. Nasser Saidi.

The Qatari sale, he added, marked "the first sale in four years, and almost double the amount expected.

In addition, Jordan auctioned its first-ever sale Sukuk of the country, a five-year 75 million Jordanian dinar (106 million dollars) deal to help finance purchases by state utility firm National Electric Power Company, said Dr. Saidi, citing the country's central bank.

Earlier last week on Wednesday at the annual Dubai construction financing summit organized by research firm MEED, Frank Beckers, Managing Director, Global Head of Project Finance Advisory at National Bank of Abu Dhabi, said that while low oil prices might have had an impact on the number of projects in the region, "the flow of project financing is still available for those projects with a sustainable investment perspective for investors and lenders." Endit