Dubai Maritime City Authority encourages Shariah compliant shipping finance (By IFN)

Dubai Maritime City Authority encourages Shariah compliant shipping finance

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UAE: Just as the Dubai Maritime City Authority (DMCA); a branch of the Dubai government which regulates, coordinates and supervizes all aspects of the maritime sector in Dubai, announced its support for its ruler’s initiative to turn Dubai into an Islamic hub, news has broken on the National Shipping Company of Saudi Arabia (Bahri)’s intentions to issue its debut Sukuk. Sukuk might have taken centre stage in the GCC, but it might just appear that shipping and aircraft financing could also share the spotlight in the near future. DMCA recently highlighted the growing importance of Islamic financing as a viable alternative source of capital in light of the slowdown, in lieu of traditional shipping financing facilities. Sultan Ahmed Sulayem, its president noted: “Dubai's transformation into a major maritime hub has opened a huge window of opportunities for maritime industry players to move ahead with their growth plans and expand their reach across new global markets. We believe this is a great opportunity to highlight the strategic advantages of Islamic financing as an excellent alternative to traditional financing.” With regards to the Bahri deal, Reuters has reported that the company will use the proposed Sukuk to refinance its outstanding debt which was used for the US$1.3 billion acquisition of Saudi Aramco's Vela fleet in 2012. HSBC Saudi Arabia, JP Morgan Chase, and Samba Financial Group who provided the initial loan have been rumoured to be the managers for the upcoming Sukuk sale. On the aircraft financing front, national aircraft carrier Emirates saw the launch of its US$1 billion amortizing Sukuk last week, on the 13th March, at a spread of 300 basis points over five year mid-swaps.