Opportunities in Islamic finance rising in Qatar IFN Reports

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10-Oct-2012
Volume9.Issue40
IFN Reports
Opportunities in Islamic finance rising in Qatar
Amjad Hussain
Qatar’s Islamic finance industry continues to slowly edge forwards on its path of steady growth
and development. The macroeconomic indicators continue to show that Qatar will post growth
this year and that the budget surplus will continue for a while yet. This, combined with a clear
regulatory regime led by the Central Bank of Qatar’s proactive stance, means that the industry
is likely to continue to grow.
This month has seen continued activity in the Islamic capital markets space. After the bumper
sovereign Sukuk issuance over the summer, we observe that Qatar Islamic Bank (QIB) is joining in.
QIB has successfully completed the issuance of a US$750 million five-year Sukuk. The most intriguing
feature of this issuance is that the book size reached in excess of US$6 billion. QIB also received a
Fitch rating of ‘A(EXP)’ for its trust certificate issuance program valued at US$1.5 billion, which
received approval last month. Continuing this trend, QIB is reported now to be considering a
benchmark-sized Sukuk.
Continuing with the capital markets theme, Qatar-based Islamic bank Barwa Bank was recently
selected as a co-manager for Turkey’s first government Sukuk issuance, valued at $1.5 billion. The
country is seen as an attractive market for Gulf-based investors, with many Gulf countries having a
stake in local Shariah compliant participation banks.
Barwa Bank also hit the headlines recently following the launch of its First Investor GCC Equity
Opportunities Fund. The fund aims to strengthen and provide greater opportunity for investments in
equities and equity-related securities listed on stock exchanges across the Gulf. The open-ended
Shariah compliant fund is part of a plan to achieve long-term capital growth through such investments.
In terms of corporate finance, this month Barwa Bank has offered a QAR900 million (US$243.2 million)
Shariah compliant credit line to Al Meera Consumer Goods, a Qatar Exchange-listed supermarket
company.
The appetite for Islamic paper shows no abeyance in Doha. There is talk in town about another major
issuance by the authorities, although this is not yet confirmed. Qatar is also looking to launch its own
ratings firm to supervise the valuation of domestic non-government debt issuers and bonds. The joint
venture, between Qatar Central Bank and Qatar Holding, is a significant step forward in establishing a
framework for the development of Qatar’s capital market. On the equity markets side, the Qatar
Exchange is renewing efforts to kick start its new SME exchange, Qatar Exchange Venture Market.
The aim is to encourage entrepreneurs to think about and tap the capital markets earlier in the
process. The Qatar Exchange Venture Market has a more streamlined process which should make it
easier for SMEs to list.
The secretary-general for The International Union for Muslim Scholars recently expressed concerns
that in an effort to compete with conventional banks, Islamic banks are straying away from the Shariah
banking values. Their call to the Qatar Central Bank to assist by focussing on this issue is unlikely to
fall on deaf ears given that the new mega Islamic bank seems to be on course to open in Doha at the
end of the year.
Amjad Hussain is a partner at law firm K&L Gates’ corporate and finance practices. He can be
contacted at Amjad.Hussain@klgates.com .
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