Wednesday, October 26, 2011

Goldman Follows HSBC, GE to Tap Muslim Wealth

Goldman Sachs Group Inc. is aiming to follow HSBC Holdings Plc and General Electric Co. to the Islamic bond market as the investment bank seeks to diversify sources of funding, reports Bloomberg (Oct 24, 2011).

Global sales of sukuk, or Islamic bonds, have jumped 48 percent so far this year to $18.8 billion from $12.7 billion in the year-earlier period, data compiled by Bloomberg show. Goldman Sachs’ $2 billion Islamic bond program was approved for listing on the Irish Stock Exchange by the Central Bank of Ireland last week.

"Since you are a new name in the market, everybody is interested, and as a debut issuer your chances of getting the deal done is higher than in currently stressed European or U.S. bond markets," Sergey Dergachev, who helps manage $8.5 billion of emerging-market debt at Union Investment Privatfonds in Frankfurt, said in an e-mailed response to the wire service.

HSBC Bank Middle East Ltd. in May sold $500 million of sukuk, or notes that comply with Islam’s ban on interest, while GE Capital Corp., a unit of General Electric Co., issued $500 million of Islamic bonds in 2009. Malaysia, the world’s largest market for Islamic bonds, and the Middle East are the main centers of the $1 trillion Islamic finance industry, it added.