Asia to Drive 24% Growth in 2010 Global Sukuk Sales, CIMB Says

Sales of Islamic bonds may increase 24 percent this year, led by Southeast Asia, as the region’s expansion helps drag the world out of recession, said CIMB Group Holdings Bhd., the leading arranger of such issuance, reports Bloomberg (3 Feb 2010).
Global sales of bonds that comply with the religion’s shariah principles, known as sukuk, will probably reach $25 billion this year, Badlisyah Abdul Ghani, chief executive officer of CIMB Islamic Bank Bhd., a unit of CIMB Holdings, said in an interview yesterday. Gulf issuance will fall after Dubai World’s attempt to reschedule $22 billion of debt eroded investor confidence, he said.
“Economic growth will trigger the need for funding,” said Badlisyah, whose bank handled 22 percent of global sukuk sales in 2009. “Most sales will come from this part of the world,” with countries including Indonesia and Thailand “moving aggressively to facilitate the industry,” he was qouted by the news agency.
The report said sukuk sales rose to $20.15 billion last year from $14.13 billion in 2008, according to data compiled by Bloomberg. Islamic finance bans the payment of interest and stipulates agreements be based on the transfer of goods or services.
The Islamic finance industry’s assets under management may swell to $2.8 trillion by 2015 from about $1 trillion as Muslim wealth increases, according to the Kuala Lumpur-based Islamic Financial Services Board. The assets of the top 500 Islamic banks expanded to $822 billion last year from $639 billion in 2008, Standard & Poor’s said Feb. 1, it added.
Developing East Asia, which excludes Japan, Hong Kong, Taiwan, South Korea and Singapore, will grow 8.1 percent this year, faster than a November estimate of 7.8 percent, the World Bank said on Jan. 21.