Business | Banking

Sukuk outlook to come under scrutiny

The value of sukuk funding is expected to cross $50 billion over the next 18 months, according to credit rating company Moody's.

  • Staff Report
  • Published: 00:14 April 13, 2008
  • Gulf News

Dubai: The value of sukuk funding is expected to cross $50 billion over the next 18 months, according to credit rating company Moody's.

The sukuk market will surpass $100 billion by the end of the decade, says Standard & Poor's.

These figures will come under further scrutiny when leading figures and institutions of the financial world start deliberations at International Islamic Finance Forum that starts on Sunday at the Jumeirah Beach Hotel, Dubai.

The premier event in Islamic finance marks seventh year in Dubai with a special focus on ethical and micro-finance in the Muslim world.

Ethical and micro-financing in the Muslim world comes under the spotlight at the premier event in Islamic finance with a special focus by "banker to the poor" Professor Mohammad Yunus who was awarded a Nobel Peace Prize.

Grameen model

Yunus is famous for his application of the concept of microcredit and helping people lift themselves out of poverty in rural Bangladesh by providing credit without requiring collateral.

The Grameen Bank has issued more than $5.1 billion to 5.3 million borrowers, maintaining a repayment rate of 99 per cent. The Grameen model has inspired similar efforts throughout the developing world and across five continents. Yunus will also be outlining the role of women, how corporations and businesses can help the poor as well as providing real life examples of social businesses.

The growth of the sukuk (or Islamic bond) market in particular has been dramatic since 2002.

"The value of new issuance at that time stood at less than $500 million compared with a total of over $60 billion in 2007," said conference manager Swati Taneja of forum organisers IIR Middle East.

"Most analysts believe that, medium term, the sukuk market will continue to grow even in today's more volatile credit environment.

"While all forms of debt instruments have been affected by the credit crunch, the impact is expected to be less in the Islamic finance sector because of the underlying asset-backed nature of the Sharia-compliant system."

The forum with participants from around 50 countries tracks the latest developments in the world's fastest growing financial sector which is seeing billions of dollars worth of deals and issues growing annually.

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