CIMB unit set to complete sukuk pipeline

Published: 2009/07/04

LONDON: CIMB Islamic, The world's leading arranger of Islamic bonds, is poised to complete its 19-strong sukuk pipeline by year-end, its chief executive Badlisyah Abdul Ghani said yesterday.

Badlisyah said on the sidelines of the London 2009 Sukuk Summit that the string of deals involves several companies around the world. In March, Badlisyah said CIMB Islamic would raise US$2.5 billion (RM8.83 billion) through its intended sukuk sales.

Sukuk or Islamic bonds are underpinned by tangible assets and do not pay interest. Sukuk volumes fell 56 per cent in 2008, from the previous year, hit by the global liquidity crunch, ratings agency Standard & Poor's said.

Badlisyah was optimistic about the growth prospects for the Islamic finance market, adding that CIMB Islamic was poised to soon raise US$1 billion (RM3.53 billion) via a five-year sukuk for a Middle East firm. He declined to name the CIMB Islamic client, which will place the debt privately.

Badlisyah said the bond was due "very, very soon" and he was very sure it would be fully subscribed by private investors. It would be one of the most significant Islamic corporate issuances in 2009, he said.

CIMB Islamic is part of CIMB Group, which is listed on the Malaysian stock exchange through Bumiputra-Commerce Holdings Bhd. It is Malaysia's No. 2 lender and Southeast Asia's fifth-largest bank by assets.

Badlisyah is optimistic about growth prospects for the Islamic finance industry, despite of the global economic slow down. He expects the industry - including the sukuk market - to grow at a double-digit rate this year.

"People are becoming aware of Islamic finance. Because of the crisis people are now asking what Islamic finance can provide them with," he said.

"Corporates who had never given a single thought about looking at Islamic finance, are actually coming to ask questions. It started last year."

He said European companies had enquired about tapping the Islamic market to raise capital.

While countries like the UK have changed tax rules and adjusted legal frameworks to facilitate Islamic finance, US law already lent itself to this, Badlisyah said.

"I am optimistic about Islamic finance, it is still growing - at a lower rate compared with the last two years - but recessions and crises come and go.

"We will be back to a situation where activities will rebound and I am very optimistic it (Islamic finance) will grow faster after we find stability, because the world is very aware of Islamic finance," he said. - Reuters