Sovereign Sukuk set to take center stage in 2H (By IFN)

GLOBAL: Sovereign Sukuk appears set to take center stage in the second half of this year; with Qatar and Turkey among the latest to emerge with plans to issue government Islamic bonds.

Qatar mandated Barwa Bank, Deutsche Bank, HSBC, QInvest and Standard Chartered to arrange roadshows beginning from the 9th July, after earlier announcing that it would set up two companies as vehicles to issue US dollar-denominated sovereign Sukuk worth up to US$4 billion.

The planned issuance will be the first time the Qatar government accesses the Sukuk market since 2003, when it issued a US$700 million facility. Moody’s has assigned a provisional long-term ‘(P)Aa2’ rating for its new issuance, with a stable outlook.

A Qatar sovereign Sukuk could be significant in encouraging the kingdom’s corporates to tap the Islamic bond market. According to data from Dealogic, the last corporate Sukuk issuance from Qatar was a US$125 million sale from conglomerate Almana Group in June last year.

S&P also noted that banks in Qatar should depend more on conventional or Islamic bond issuances for capital raising, instead of on deposits which are on the decline, to continue funding the kingdom’s economic expansion without encountering future problems.

Meanwhile, Turkey, which has yet to issue a sovereign Sukuk, is reportedly set to hire Citi, Deutsche Bank and HSBC to manage its debut Islamic bond sale. The country could be eyeing an offering of as much as US$1 billion, as it takes advantage of optimism on its robust economy and its growing ties with the GCC.

A Turkey sovereign Sukuk will also help establish a benchmark for corporate issuances, with the first Sukuk from the country only issued in 2010; by Kuveyt Türk Katilim Bankasi.

With Qatar and Turkey gearing up to issue sovereign Sukuk, in addition to a potential issuance by South Africa, which will be its first, the market for sovereign Sukuk looks set for a boost. To-date, sovereign Sukuk sales include those from Saudi Arabia’s General Authority for Civil Aviation and Dubai’s ministry of finance.

See: http://redmoney.newsweaver.co.uk/dlx0n0lrr6fh38rwoni3wx?email=true&a=6&p=25638075&t=21602675