& By Gulam Ali Khan & As an alternative to conventional financing, Omani companies will soon be allowed to issue
sukuk to raise funds in the local market. Capital Market Authority (CMA) is preparing the necessary regulations to facilitate the issuance of corporate sukuk in
Oman.
Unlike conventional bonds, which are debt-based instruments that pay interest, sukuk, or Sharia-compliant Islamic bonds, are asset-based and represent ownership by the sukuk holders in the underlying asset and allows them to share true profit from those underlying assets.
Speaking to Muscat Daily on the sidelines of the Oman Capital Market Forum at Al Bustan Palace Hotel on Tuesday, Ahmed Saleh al Marhoon, director general of Muscat Securities Market (MSM), said that initial CMA rules would allow listed firms to issue sukuk, which would later be extended to non-listed firms as well.
"A few companies have approached CMA and evinced interest in issuing sukuk. Al Madina Real Estate Company approached CMA last year, when sukuk issuance was not allowed and they were not given the go ahead."
However, Marhoon declined to on when Oman's first sukuk issue will come out, but said that sukuk would be more acceptable to companies than conventional bonds.
"There are a lot of investors in Oman who want& to invest in sukuk and are waiting for the opportunity. The government also could choose to finance its projects through sukuk issuance. We are sure there will be good demand for sukuk in the market."
Yahya bin Said al JaBRi, executive president of CMA, said that CMA is preparing the ground for takaful and sukuk products and have sent teams to Malaysia and& Bahrain to study how the markets for Islamic products work.
"The launch of new products like sukuk will follow the launch of Islamic banking here. We are educating ourselves and preparing the necessary regulatory infrastructure to supervise these products."
Sukuk may be an ideal instrument for companies in Oman and would open a new source of financing. Companies have traditionally looked to bank financing in view of the lack of other finance operations.
Hussain al Yafai, director of debt capital markets at Standard Chartered, said GCC countries need to focus on sovereign sukuk issues to create a benchmark for yield.
"Oman is moving in the right direction and opening up Islamic finance is a key milestone. Sukuk will create more liquidity and Islamic funds in the market which will enable corporates to look at different source of funding."
© Muscat Daily 2011¬
