Qatar spending drive to boost sukuk issuances

Sukuk issuances are set to expand in Qatar on top of financial pressures from increased infrastructure spending and an expected rise in demand from Southeast Asia and China, Inside Investor has said in a report.

Skycrapers stand beside a highway on the city skyline in Doha (file). Increased spending in infrastructure aligned with the country’s 2016 investment plans, which account for about 40% of Qatar’s budget, and the upcoming FIFA World Cup in 2022 will create greater demand for project finance, analysts predict.

Increased spending in infrastructure aligned with the country’s 2016 investment plans, which account for about 40% of Qatar’s budget, and the upcoming FIFA World Cup in 2022 will create greater demand for project finance, analysts predict.
Shariah-compliant bonds, already accredited with successfully attracting subscribers from China, Southeast Asia and even the West, will be one way that Qatari authorities and government-related companies will fund projects that include $11bn for a new international airport and $5.5bn for a deep-water seaport.
Another $25bn rail network will cover the construction of a metropolitan railway in Doha, a high-speed rail link between New Doha International Airport, Doha city centre and across the proposed Qatar-Bahrain Causeway into Bahrain, in addition to a freight line that will link up with the wider GCC (Gulf Cooperation Council) rail network.
In 2011, Qatar issued 11% of all global sukuk, placing it second behind Malaysia, which represented a substantial 69% of the world’s total issuances, said Inside Investor, an international media company, event organiser and business consulting firm.
The Middle East North Africa (Mena) region accounted for 16% of the world’s total sukuk issuances in 2011, amounting to $84.4bn.
Difficulties getting credit from banks, heightened volatility in equity markets and the ongoing eurozone crisis will also continue to push finance seekers towards sukuk.
Following a greater global shift towards the instrument on top of higher sukuk popularity, global sukuk issuances could jump as high as 50% year-on-year in years to come, HSBC Amanah, the bank’s Shariah-compliant window, announced in early 2012.

Source: Caye Global News, Gulf Times

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