2009 London Sukuk Summit

View previous Sukuk Summit events: 2007 2008

Imminent new sovereign issuances in the GCC; the anticipated launch of the IDB US$500m international Sukuk at the end of June 2009 and a huge improvement in the average price of Sukuk over the last four months, is further evidence that the market is rallying fast and are good omens for a dramatic upturn in confidence over the next year.

According to City Law firm, Trowers & Hamlins, the average price of GCC corporate Sukuk has increased by 29 per cent since 11 February 2009; while the average yield on such Sukuk has fallen from 17.2 per cent to 10.1 per cent; and the average credit spread over LIBOR has narrowed from 1,414 basis points to 763 basis points. The reasons for this optimism include the recent rally in world capital markets; the recovery in oil prices; and the US$10bn bailout loan given to Dubai by the UAE Central Bank. Market sentiments also suggest that the risk of corporate Sukuk default has been greatly reduced and is receding.

Bahrain�s two scheduled sovereign Sukuk issuances � a domestic Sukuk offering and a planned US$500m international Sukuk � is expected to kickstart the Sukuk market in the GCC, which in recent months have trailed South East Asia in any potential revival of the Sukuk market.

Similarly, the Islamic Development Bank (IDB) is finalising the legal documentation for its planned US$500m international Sukuk issuance. Depending on the pricing, the IDB may yet increase the volume of the issuance, which is expected to be launched at the end of June 2009.

Indeed IDB President, Dr Ahmad Muhammed Ali, has been invited to give a keynote address in the morning of the London Sukuk & Islamic Capital Markets Summit 2009, which will be held on 2-3 July 2009 at the Radisson Hotel in London. This third consecutive summit, in the series, organised by ICG Events is endorsed by HM Treasury, UKTI, The London Stock Exchange, International Financial Services London (IFSL) and The Arab British Chamber of Commerce.

The Summit will also be addressed by Dato� Sri Zarinah Anwar, Chairman of the Securities Commission of Malaysia, which will be followed by an exclusive joint presentation by the UK Treasury and Financial Services Authority (FSA) on the latest measures the UK Treasury is proposing to facilitate corporate Sukuk issuance in the sterling market.

Across the English Channel, there is talk of the first French Sukuk issuance, albeit a corporate one, and Luxembourg is also now promoting itself as a domicile of choice for Islamic funds registration and Sukuk listings and other such services. In fact, the Duchy Government has recently established a Taskforce to study how tax neutrality can be introduced where applicable to facilitate Islamic financial products such as Sukuk and Murabaha. The Taskforce is also looking at issues in avoiding double taxation when structuring Islamic transactions in Luxembourg. Luxembourg-domiciled investment funds, of course, are already tax neutral.

According to Luxembourg lawyer, Marc Theisen, another confirmed speaker at the London Sukuk Summit, there are 14 Sukuk with a combined value of $5.5 billion and 42 Shariah-compliant funds (out of a total 560 funds) listed on the Luxemburg Stock Exchange. In the first Quarter of 2009 alone, six new Islamic funds were listed on the Exchange, which was also the first in Europe to list a Sukuk in 2002.

Another country that is expected to issue a Sukuk during 2009 is Korea. According to Lee Do Heon, Managing Director, Global Business Department, Korea Investment & Securities Co. Limited, �we are looking at the possibility of arranging corporate Sukuk for Korean companies and also at launching a number of Islamic equity funds based on Korean and Asian Shariah-compliant stocks. In the case of Sukuk, we are first thinking of an international placement of a prominent Korean issuer and later when the regulations are introduced we may have a Sukuk placement in Korea for other issuers say from the Middle East and South East Asia. I am confident that a private Korean corporate or government-linked corporate would issue a Sukuk in the near future.�

With these encouraging developments, the London Sukuk & ICM Summit 2009, the third successive summit in the series, along the theme �Innovating for the Future: The Next Generation of Post Credit Crunch Sukuk Structures/Preparing for the Next Wave of ICM Offerings� offers participants access to a unique platform of discussions, experts and addresses.

The Summit is preceded by a Sukuk Masterclass titled �Understanding Sukuk - Issues, Structuring, Innovation� on 1 July 2009 and conducted by a team of top experts in various fields relating to Sukuk and Islamic Capital Markets.

The timing of the summit could not be more opportune and follows on from the highly successful inaugural London Sukuk Summit along the theme �Strategies for Today; Demystifying Islamic Capital Market Products� held in June 2007; the equally successful follow-up London Sukuk Summit in June 2008 along the theme �Gearing up for UK Sukuk Originations�, and the inaugural and well-attended Asia Sukuk Summit 2009 along the theme �Towards a New Silk Route for Islamic Finance� held on 19th-20th February 2009 in Hong Kong.

The Islamic capital markets is indeed poised to play an important role in the next stage of development of the global Islamic finance sector per se which has better withstood the vagaries of the credit crunch and the global financial market.

The challenge is to consolidate these Islamic Capital Markets and Sukuk structures and to come up with even more imaginative and economically productive structures and products. The market developments whether they be in Dubai, London, Hong Kong, Singapore, Bahrain, Jeddah, Hong Kong or Kuala Lumpur are underpinned by progress in enabling regulation, legislation, innovation, Shariah governance, diversification and market education.

The London Sukuk Summit 2009 is specifically aimed at harnessing these developments to keep you informed about the Sukuk market developments and innovation; to provide a platform for dialogue with your peers; and to give you a voice in contributing to the future direction of the Islamic debt and capital markets. Can you afford to not to be part of this informative, inspiring and imaginative process!