Thursday, December 15, 2011

More European, Gulf investors to issue ringgit sukuk

KUALA LUMPUR (Dec 15): The Malaysian sukuk market will see more ringgit-denominated sukuk issuance by investors from Europe and Gulf Cooperation
Council (GCC) countries next year, said Amanie Advisors Sdn Bhd director, Baiza Bain.

He said on Thursday this would result in an increase of up to 67% in Malaysia's contribution to global sukuk issuance.

Malaysia accounted for 62.7%, or US$179.1 billion, to global sukuk issuance as of first half of this year with Islamic banking assets worth RM389.3
billion as at end-July, 2011.

Baiza said the eurozone sovereign debt crisis, which was expected to deepen next year, would provide more opportunities for the local sukuk market, as it would be seen as an alternative.

"A lot of people are crippled by the eurobond issuance and they are having difficulties raising funds in the eurozone, so they shift to Islamic issuance,"
he said at the Asian Islamic Investment Management (AiiMAN) media briefing on 'The Misconceptions in Islamic Investments' here.

He said as of Wednesday, total global sukuk issuance stood at US$79.2 billion, surpassing most estimates in the market and this certainly mirrored the
increasing demand.

"Currently, foreign issuance accounts for 10%-15% of the local sukuk issuance and we expect to see the contribution increase to 25-30 per cent in
2012, with larger value," he said.

Baiza said compared to the Gulf countries, Malaysia has a dynamic secondary market platform for trading and has the liquidity to support the issuances.

Going forward, he said, retail investors would benefit from the shift from eurozone to Malaysian capital market.

"We will have more quality and highly-rated issuances and overall yield will be better," he said. - Bernama

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