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London 2012 Sukuk Summit

The sixth annual London Sukuk Summit (the world’s largest Sukuk gathering) is scheduled to take place on the 6th & 7th of June 2012 at the Jumeriah Carlton Hotel in London and is set against the backdrop of a vibrant global Islamic capital market as the Sukuk sector took off to a strong start in 2012 with January the busiest month ever seen in the market. According to market experts this trend is expected to continue throughout 2012 with a significant increase in Sukuk issuance as Islamic capital markets perform well against financial crisis and liquidly crunch of 2011.

Industry experts expect Sukuk issuance in the Middle East to reach over $14bn this year, as investor demand and the relatively lower volatility of the asset class drive sales. Forecasts suggest global Sukuk volumes of $44bn in 2012, of which the Middle East region could comprise just over 30%, with Malaysia continuing to dominate Sukuk issuance, with about 60% of total volumes forecast globally.

One of the key drivers of this will be the continued level of liquidity within the overall Islamic investor base, whether in Middle East or Asia, the market is still very much characterized by a high degree of liquidity and relatively limited levels of supply. From a volume, country, and issuer perspective, 2012 is going to be a year when this market continues to make its mark. The UAE and Saudi Arabia are likely to dominate the regional Sukuk issuance landscape. So far this year, Emirates Islamic Bank and First Gulf Bank, as well as private corporate and a first-time issuer, Majid Al Futtaim Holding, have come into the market

In Saudi Arabia, the General Authority for Civil Aviation (GACA) issued a $4bn equivalent riyal-denominated bond in January. “We increasingly expect that businesses consider Sukuk as a reliable and permanent source of capital (in Saudi Arabia)... and the number of investors and the appetite for Sukuk is growing,” said Muhammad Farhan, head of Islamic Finance at HSBC Saudi Arabia.

During the financial crisis, and particularly after the asset bubble burst in the GCC, Sukuk spreads widened considerably, especially relative to conventional counterparts. In the last year, however, Sukuk spreads have continually tightened with spreads now tighter than conventional bond indices.

This is as a result of the high demand for Sukuk and the lack of supply to satisfy the liquidity available with Islamic banks. The London Sukuk Summit is once again well timed and should provide an ideal platform for industry experts and those interested in accessing the industry to discuss the key issues, highlight and identify new opportunities and forge new business relationships.