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Country Report - UAE: Leading The Way In The Middle East

The past month witnessed the announcement of several pieces of groundbreaking news fostering the growth and presence of Shariah compliant products in the Middle Eastern market. The latest developments are pushing hard at the limits and boundaries of the Islamic finance industry as serious new players are coming on board.

Goldman Sachs Sukuk: Goldman Sachs successfully issued a sizeable US dollardenominated Sukuk with a Wakalah structure last month, becoming the first conventional US bank to issue Sukuk.

This is the second attempt for Goldman Sachs, as the first one (which took place in 2011) never went through. The model followed for this deal is based on Wakalah, which is a basic structure and less complicated than other structures opted for in similar deals such as Murabahah; thus posing fewer challenges as to its conformity and compliance with Islamic Shariah principles, especially when it is structured and promoted by a conventional bank.

It was reported earlier this month that at least three UAE-based banks supported Goldman Sachs in arranging meetings with local investors. The Sukuk were primarily bought by Middle Eastern banks.

DIFC Investments Sukuk: DIFC Investments, which is the investment arm of the Dubai International Financial Center Authority, announced in the past week its intention to raise about US$700 million from an Islamic bond sale with the purpose of using it to repay debt.

This was announced by the DIFC governor Essa Kazim, who further noted that the bonds will be mainly used to repay the US$650 million outstanding on a syndicated loan, to develop another building in DIFC’s Gate Village and to fund the completion of a connecting corridor across the business park.

Limitless re-negotiating Islamic debt facility: Limitless, a Dubai based real estate master developer owned by the Dubai government, is holding talks with its creditors with the purpose of re-negotiating the terms of a US$1.2 billion debt facility. This has been already negotiated one time before, however the company seems to have a new business plan that it would like to implement and is expected to heavily support the course of these negotiations.

In addition to the above and with the expansion of diff erent Islamic product offerings, Noor Bank recently announced the launch of two new Shariah compliant home finance offers at a fixed profit rate.

We are expecting to hear further announcements in the same context in the coming months. A number of Russian and East European banks are actively studying the Islamic market in Asia and the Middle East with the intention of entering into possible ventures with strategic Islamic-based institutions.

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Published: October2014
Publication: Islamic Finance News
Title: Country report - UAE: Leading the way in the Middle East
Practice: Corporate and M&A,Banking & Finance
Authors: Rima Mrad
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