AGENCIES

LONDON QATAR is planning its first international Islamic bond (sukuk) offering, according to sources. It has already sent request for proposals to banks, and is close to being mandated.

Sources believe it will choose a mix of international and local banks.

While timing has yet to be decided, the transaction will probably be in the second quarter, ahead of the summer break. Other details, such as size and tenor, have also still be agreed, though if Qatar’s previous conventional deals are any guide, the chances are the sukuk will be a multibillion dollar offering in more than one tenor.

Qatar is one of the most soughtafter borrowers in the world. Its last transaction, in late November, was a $5 billion, Triple Tranche 144a/Reg S, which attracted a $9.5 billion order book. HSBC, Citigroup, Mitsubishi UFJ, QNB Capital and Standard Chartered were the leads on that deal.

Islamic finance has been growing rapidly over the past several years as it broadens its investor base across the Gulf and Southeast Asian regions.

The Global sukuk industry began 2012 on a very positive note.

According to Zawya Sukuk Monitor $20 billion sukuk were issued in the month, making January 2012 by far the best month on record in terms of issuance since 1996. Issuance was inflated by two exceptional sukuk in terms of size - Saudi’s General Authority for Civil Aviation $4 billion sukuk and Malaysia’s PLUS $10 billion sukuk.

More conventional borrowers are expected to hit the market soon.

While US-based Goldman Sachs’s sukuk might not see the light anytime soon due to the controversy over it Shariah compliance, UAE-based Majid Al Futtaim initiated investor meetings on January 29 for its recently set up $1 billion sukuk programme and managed to sell $400 million, the company’s first bond ever - interestingly enough, a sukuk.

Corporate conventional borrowers are not the only ones opting for sukuk. On a sovereign level, the governments of South Africa and Ireland will tap the sukuk market for the first time in the coming months, according to media reports.

Banks which do not sell sukuk themselves are looking for opportunities to manage and sell sukuk on behalf of other issuers, in an effort to grab a share of the booming Islamic finance industry.