HSBC overtakes CIMB sukuk sales

Kuala Lumpur: HSBC Holdings is overtaking CIMB Group Holdings as the top underwriter of Islamic bonds as sales from the Gulf pick up and corporate issuance from Malaysia, the biggest market for the debt, declines.

HSBC, Europe's biggest lender by market value, arranged $1.6 billion (Dh5.9 billion) of global sukuk so far in 2010, about 25 per cent of the total, led by Saudi Electricity's issuance in May, according to data compiled by Bloomberg.

CIMB Group, Malaysia's second-largest banking group, led $1.4 billion of sales of debt that complies with the religion's ban on interest.

Last year, CIMB was the top underwriter, managing $4.4 billion of offerings.

"The origin of the issuer may have an impact on the decision to hire which underwriter," said Azr Al Azwar Ahmad Taj Al Deen, chief economist at Bank Islam Malaysia, the country's oldest Sharia-compliant bank, in an interview in Kuala Lumpur. "If the issuance amount is huge, issuers may have some level of comfort with a foreign bank."

Sales of Malaysian ringgit-denominated sukuk slumped 44 per cent to 9.4 billion ringgit (Dh11 billion) so far this year as companies delayed infrastructure projects after the economy slipped into recession in 2009.

The government began a 230 billion ringgit, five-year development plan on June 10, which may revive offerings of Islamic bonds, according to Malaysian rating company RAM Holdings.

Decline in notes

Gulf issuers sold $2.5 billion of Islamic notes in the first half of the year, down 13 per cent from a year earlier, Bloomberg data show.

Issuers from the Middle East may sell more than $10 billion of bonds in the remainder of the year to refinance debt and fund projects, according to data compiled by Bloomberg.

Malaysian companies may sell as much as $5.2 billion.