Issuers in Dubai open their arms to international opportunities
Despite the current turbulent economic environment and the cautious climate pervading the financial markets, increasing international collaboration and a focus on global opportunities have broadened the scope of the Islamic finance issuance spectrum. Delegates from across the Islamic world attended the IFN Issuers Forum at the Ritz-Carlton in Dubai yesterday for an event that confirmed an encouraging trend for Shariah compliant capital-raising.
With over 180 participants from countries across the GCC as well as Malaysia, North Africa, Europe, the US and many more, one of the most striking themes of the conference was its international flavor and outward-looking perspective – and this was also reflected in the truly global array of keynote speakers and panelists.
Opening the event was Dr Mohammed Fetanat, the president of the Securities and Exchange Organization of Iran (SEO), who highlighted the country’s commitment not only to developing its domestic Islamic finance capabilities but to achieving a higher international profile with “an emphasis on building relationships and developing new policies” and “learning from the experience of other countries”. The SEO president confirmed that Iran has plans to develop the domestic Sukuk market and introduce new Sukuk instruments, funds and capital market tools to broaden the range available to investors. The SEO also supports the introduction of credit ratings into the capital market, as well as risk-based returns for Sukuk and the potential development of Islamic derivatives, securities and treasury instruments to support the secondary market. “We welcome you as investors to our capital market, as advisors to our institutions… and as intermediaries for connecting our international financial market,” said Dr Fetanat. “We particularly welcome institutions who have long-term plans and are willing to share their knowledge, who see the value of a local presence, and want to add something to our market.”
Abdulla Al Awar, CEO of the Dubai Islamic Economy Development Center, also stressed the opportunities both regional and international, as well as the challenges of raising capital in the current climate. “These are turbulent times,” he agreed. However, this has led to borrowers, both sovereign and corporate, considering non-traditional avenues of raising finance – including Shariah compliant channels. “The Islamic finance system has evolved into a comprehensive financial system of its own,” he noted, “and is predicted to reach US$3.2 trillion, an increase of 80%, over the next five years.” With a long-standing investor base and a growing international reach, he confirmed that: “I am confident that Sukuk will increase, driven by active institutional investors – not only in the GCC itself but in Europe, the US and around the world.”
Adding to this global perspective was Dr Bambang PS Brodjonegoro, the minister of finance for Indonesia, who emphasized the strength and stability of the Indonesian financial market and its appeal to international investors. “Indonesia is the largest economy in Southeast Asia, and the 10th largest in the world,” he noted. “The government of Indonesia is looking forward to partnering with investors, and to further developing the international Sukuk market.” This cross-border focus was emphasized today, with the announcement of four Indonesian sovereign Sukuk worth US$6 billion listed on NASDAQ Dubai – the largest-ever to be executed by a sovereign issuer in Dubai.
The panel sessions themselves also reflected an international flavor. “What is interesting about this session,” commented Qasim Aslam, the head of Islamic finance at Dentons, in his role as the chairman for the session on ‘Raising Capital in the Current Economic Environment, “is that it draws from many different perspectives from around the world.” Participants included Jawad Ali of King & Spalding, Linar Yakupov, the president of the Islamic Business and Development Finance Fund of the Russian Federation, Mohd Izani Ghani, CFO of Malaysian sovereign wealth fund Khazanah Nasional and Robert Scharfe, CEO of the Luxembourg Stock Exchange, with a discussion that ranged widely but concluded with a positive outlook for capital-raising and corporate strategy.
Focusing on the issues, complexities and opportunities currently facing corporates and institutions seeking to raise capital, one of the highlights of the day was the Deal Dialogue on the UKEF-backed Emirates Airlines Sukuk, chaired by IFN group managing editor Lauren McAughtry and including Gordon Welsh, the head of aviation for UK Export Finance as well as Nirmal Govindadas, the group treasurer of Emirates Group, Gregory Man of Norton Rose Fulbright, Shuaib Murza of Clifford Chance and Mohammed Dawood, the managing director and global head of Sukuk financing at HSBC – who described this innovative deal as «one of the most significant strategic transactions the industry has seen for many years». The panel highlighted one of the key strengths and benefits of the event: connecting issuers themselves with practitioners and industry players and offering a full spectrum perspective on the deals themselves and the issues that matter to the industry.
With an exceptional array of attendees and an enthusiastic response from the industry, discussions ranged from new structures in Sukuk issuance to opportunities in alternative channels of financing, to the current surge of Sukuk issuance in countries such as Saudi Arabia, Turkey and the UAE and the strong outlook going into the final half of the year. While challenges remain and the economic climate continues to warn caution, the atmosphere of the event suggested a very positive pipeline for the upcoming months – with exciting new issuances to watch out for in both the corporate and sovereign space in both old markets and new. And as always, you will find the very latest news and cutting edge analysis here in the pages of Islamic Finance news.
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