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Ehsun Zaidi, Dubai Islamic Bank: Financing out of the box |
Above all other products the sukuk or Shariah-compliant bond symbolizes the rapid growth of Islamic finance. In 2006, issuance volumes reached $25.98 billion through 241 deals, compared with $11.55 billion and 126 transactions the previous year, according to data provider Ifis. The biggest reason for the surge in volumes is that the Middle East’s more forward-thinking corporates are looking to the Islamic capital markets to fuel their growth. Last year, there were sukuk deals from Abu Dhabi’s Aabar Petroleum, the UAE’s Tabreed and Saudi Arabia’s Sabic among others in the region. Although many of these corporates are cash-rich they are beginning to realize that the capital markets offer them the opportunity to diversify their investor bases. Shariah-compliant structures attract both conventional and Islamic investors. “Most issuers see value in a more inclusive facility,” says Ehsun Zaidi, head of capital markets at Dubai Islamic Bank.
What particularly stands out from last year is the growth of non-vanilla sukuk products in the Middle East and Asia. In the summer, Aabar Petroleum priced what lead manager Deutsche Bank claims was the first truly convertible Islamic bond issue, and in September Malaysian state investment arm Khazanah became the first borrower to issue an Islamic exchangeable bond.