Sukuk (Islamic bonds) issuance last July worldwide amounted to about $5 billion, down 37 percent from the previous month, Kuwait Finance House (KFH) said Sunday. Saudi riyal formed about 15 percent of those sukuk, it noted. The report said the sovereign sukuk topped issuances in July, including three versions of sukuk for Saudi and Qatari companies. In the Middle East and North Africa region, only few countries have issued sukuk so far and these are 5 of the GCC states and including Sudan. It added that the sukuk market for companies in the GCC countries continued to expand this year through the issuance of two local versions from Saudi Arabia and an international sukuk from Qatar. Despite the decline, the main sukuk market continued its annual increment by 133 percent in July, raising the value of annual releases to $52.1 billion. The Islamic finance industry is estimated to be worth $1 trillion and is expected to double over the coming years. Egypt was planning to issue its first Islamic debt guidelines in 2011 to catch up with the Gulf and Southeast Asia and help spur sales. However, the recent developments could delay such plans till further notice. In Algeria, Ismail Noureddine, the president of Commission of supervision of stock exchange operations (COSOB), declared that the introduction of new financial products as sukuk is under consideration. Turkey has made major steps in developing Islamic finance and facilitating issuance of sukuk. The Turkish National Assembly in Ankara passed the Finance Bill 2011 in February which includes tax neutrality measures for Sukuk Al-Ijara (leasing certificates), paving the way for a spate of corporate sukuk issuances in the country. KFH has said earlier that the value of sukuk issued in the first half of this year has amounted to some $47 billion, exceeding the record high reached last year of $45 billion. The issuance of global Sukuk jumped in the first half of 2011 by 34.7 percent, KFH said, noting that sukuk markets saw a seesaw movement in June after Malaysian government issued sukuk amounting to $2 billion. Separately, global sukuk issuance rose by 18 percent in Q2 2011 on year-ago levels to $16 billion, Zawya's Sukuk Quarterly Bulletin said recently. Across H1 2011, some $43.8 billion was raised globally, setting a new record. Government issuance dominated in Q2 2011, totaling $11.651 billion. Malaysia has made unprecedented achievements in the Islamic finance sector and it currently dominates domestic sukuk,with 72 percent by value, Sudan leads short-term issuance (maturity one year or less). "The trend toward issuing shorter tenure sukuk is slowly increasing and is again driven by sovereign issuers through central banks, Ijlal Ahmad Alvi, chairman & CEO, International Islamic Financial Market (IIFM), said. Bahrain is the most active market within the Gulf Cooperation Council (GCC), regularly issuing short-term Sukuk Al Salam and Sukuk Al Ijarah. "It is the first government in the GCC to use sukuk as one of the primary tools for raising finance," he said, adding that "it is expected that Bahrain, Brunei, Sudan plus several new entrants, will contribute to the development of the short end of the market." Malaysia was responsible for $12.676 million in sukuk, all denominated in MYR. By structure, Murabaha was the most important, accounting for $7.56 billion, followed by Bai Bithaman Ajil ($2.49 billion) and Musharaka ($2.2 billion). The top five sukuk lead managers (excluding central banks) were: HSBC Bank Middle East (four issues worth a total of $904 million); Aminvestment Bank (24 issues, $789 million); Maybank (46 issues, $625 million); RHB Islamic Bank(six issues, $591 million); Standard Chartered Middle East & South Asia (nine issues, $402 million).
