Sukuk expected to fuel infrastructure projects (By IFN)

Sukuk expected to fuel infrastructure projects

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QATAR: As the second most prolific Sukuk issuer of 2012, Qatar is expected to continue on its issuance high as the government looks to spend US$130 billion by 2016 on infrastructure projects. The lead up to the country’s role as host to the 2022 FIFA World Cup has also had a significant impact on the government’s spending priorities, with long-term infrastructure projects including a metro and rail system, a revamp of the road system and hotels at the top of the list. Government and government-linked entities are expected to tap the Sukuk market to raise funds for these projects. The country’s US$4 billion sovereign Sukuk issued last year had seen a bookorder of six times, with most of the demand coming from highly liquid Islamic investment funds in the Middle East. However, this year, the country is expected to attract a more diverse pool of investors, including those from China, Europe and SouthEast Asia, on the back of its phenomenal growth in the banking and capital markets space in 2012; according to a report by Oxford Business Group. Qatar issued 11% of global Sukuk last year coming in second after Malaysia, with a 69% share. The country’s banking sector is also expected to benefit from the slew of high-profile hires by domestic Qatari banks, as well as an increased presence of foreign banks, including Credit Suisse which recently moved its investment banking team to Doha following a 6% acquisition by the Qatar Investment Authority. Qatar based Islamic banks such as Barwa Bank are also fast gaining ground on a global scale, ending 2012 as one of the top underwriters for global Sukuk, amongst the ranks of National Bank of Abu Dhabi, Dubai Islamic Bank, HSBC and Standard Chartered. An improving investment environment, as well as large-scale infrastructure projects are expected to buoy the Qatari economy in the next year, creating immense opportunities in the Islamic capital markets space.