UAE likely to launch more local currency sukuk, says S&P

UAE likely to launch more local currency sukuk, says S&P

Global rating agency S&P Global Ratings expects UAE to launch more sukuk issuances in the local currency in the coming years to develop local capital markets. The UAE Government launched a Dh1.1 billion dirham-denominated Islamic Treasury Sukuk (T-Sukuk) in April to build a local currency bond market and boost the Islamic economy. The sukuk were issued initially in 2/3/5-year tenures; followed by a 10-year sukuk at a later date. The T-Sukuk are financial certificates which will be traded to reflect the local return on investment and support economic diversification and financial inclusion. “We expect to see more such issuance in the next few years as the UAE authorities continue efforts to develop the local capital market,” said Mohamed Damak, primary credit analyst, S&P. The local dirham-denominated Islamic bond market is still in its infancy stage, hence, local players are still raising funds through issuing dollar or other foreign currency-denominated sukuk. Abu Dhabi Islamic Bank this week raised $750 million dollar-denominated additional tier-one perpetual sukuk. Master developer Damac sold a three-year $400 million Islamic bond in April. More Gulf issuances S&P forecast that global issuance will total $160-170 billion this year, which is higher than its initial estimate of $150 billion,