The $490 million issue of three-month sukuk priced at 30 basis points over Libor. It was an important event for the industry, and something for the Islamic finance community to be proud of. But there was just one thing awry: Saudi Arabia, previously one of the key constituents, had gone missing along the way. In February 2012, Euromoney ran a feature looking at the IILM, an institution that had been launched in 2010. It had 14 founder members from Malaysia to Saudi Arabia: the greatest cooperation ever seen in the sector. It was a good idea, Euromoney argued; so why wasnt it actually doing anything? When the IILM was established that October, it reflected a widespread recognition that Islamic banking might have run into serious trouble in the global financial crisis had there been a loss of confidence in inter-bank liquidity in the Islamic world, as there was in conventional finance. Islamic banks then did not have any instruments available in the capital markets to bolster liquidity, particularly cross-border. Driving forceThe driving force of the initiative was Zeti Akhtar Aziz, governor of Bank Negara, the Malaysian central bank. But what was truly impressive about the IILMs foundation was the breadth of its engagement: alongside Malaysia and Indonesia in Asia were everyone that mattered in the Middle East: Saudi Arabia, Kuwait, Qatar, the United Arab Emirates and Iran plus representation from Africa (Nigeria, Sudan and Mauritius), Europe (Turkey and Luxembourg), and the Islamic Development Bank.
That sounds promising, but again things are unclear. IILMs own release on the sukuk programme names seven primary dealers, and none of them is Saudi Arabian. Malaysia is represented, through Maybank Islamic; Kuwait Finance House is there; AlBaraka Turk; National Bank of Abu Dhabi; Qatar National Bank; Luxembourgs KBL; and Standard Chartered as the only global name. Al Rajhi, from Saudi Arabia, was expected to be a primary dealer, but was not on the list.