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Morgan Stanley plans first sukuk by multinational

Morgan Stanley plans to bring the first "multinational" to the Islamic bond market as early as this quarter with a sale that may spur other international companies to sell securities targeting Muslim investors.

  • Bloomberg
  • Published: 00:14 February 7, 2008
  • Gulf News

Dubai: Morgan Stanley plans to bring the first "multinational" to the Islamic bond market as early as this quarter with a sale that may spur other international companies to sell securities targeting Muslim investors.

"They have links to the Middle East and are looking to diversify sources of funding" as US mortgage losses crimp global investor demand for debt, Yavar Moini, Morgan Stanley's executive director of global capital markets in Dubai, said.

The multinational's first sale of Islamic bonds, known as sukuk, will be part of a $5 billion medium-term note programme, Moini said. The second-biggest US securities firm defines multinationals as companies with global operations that have a "household name".

Middle East borrowers have largely sidestepped the turmoil in global credit markets triggered by the collapse of the US subprime home-loan market, raising $17.9 billion from Islamic securities in 2007, 75 per cent more than the previous year.

Global sukuk sales jumped 70 per cent last year to a record $30.8 billion, data compiled by Bloomberg show.

The sale will be a "landmark that will encourage others to tap the sukuk market", Moini said, declining to be more specific.

Gulf borrowing costs increased by as much as 0.2 percentage point from the first half of 2007, before the collapse of the subprime mortgage markets paralysed debt sales worldwide, Declan Hegarty, HSBC Holdings' Middle East head of debt capital, said January 30.

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