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Jordan and Bahrain sukuk announcements reassured MENA sukuk market in April while key fundamentals are expected to support the market in 2011, writes Adnan Halawi, Zawya's fixed income analyst
Despite the gloomy political picture in the Middle East and North Africa (MENA) region and the tragic events taking place from the Gulf to the Ocean, the region witnessed in April a reasonable amount of sukuk announcements and deals, thus sustaining its role in the development of the ever-growing sukuk markets.
Although closed in the first quarter, the JOD85 million (USD120 million) Al Rajhi Cement - Jordan sukuk was unveiled in April. The sukuk, which represented the first corporate sukuk ever out of Jordan, came in line with our expectations that Jordan will join the issuing countries after Yemen and Iran did earlier this year. The Al-Ijara Muntahia Bittamilik sukuk due in 2018 pays weighted average prime lending rate of reference banks plus a margin of 0.5% per annum on a semi-annual basis. It was solely arranged by Capital Investments and Brokerage Company.
Unrest-hit Bahrain made a big announcement when it issued its 17th long-term Government Ijarah Sukuk worth BHD200 (USD530 million). The five-year benchmark sukuk, which pays 5.5% on a semi-annual basis, demonstrated that demand for Shariah-compliant sovereign debt remains strong despite the turmoil. It was followed by a listing announcement on Bahrain Bourse.
Kuwait, which was absent for a while from the sukuk market, seems to be back on track. Following the GIC IMTN Sukuk sold in Malaysia in March, First Investment Company (Al Oula) chose to restructure its debt by issuing a KWD92 million (USD335 million) five-year Wakala Sukuk. In April, it was reported that Liquidity House is to manage sukuk of up to USD1 billion this year.
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