Banks and companies in the Persian Gulf may issue the most Islamic debt in three years in the fourth quarter as economic growth accelerates and Dubai’s companies reach agreements to restructure debt.
The Islamic Development Bank, a Jeddah-based multilateral lender, said on Aug. 24 it would raise $1 billion selling debt that complies with Shariah law’s ban on interest, taking planned offerings for the remainder of the year to $5.5 billion. That would be the most since the third quarter of 2007, when Gulf sukuk issuance totaled $5.7 billion, according to data compiled by Bloomberg. Sales from the region have declined 24 percent to $2.5 billion so far in 2010, as three companies sold Islamic debt, Bloomberg data show.
“Investors are hungry for supply,” Naji Nabaa, a Dubai- based associate director of fixed-income sales for the Middle East and North Africa at Exotix Ltd., an investment bank specializing in illiquid assets, said in a telephone interview yesterday. “There’s a cash pile that has built up. Now that we’re seeing an early settlement between Dubai World and banks, it has given the credit markets some impetus to rally.”
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