Several companies, especially from the Middle East, are in talks with investment banks for issuance of Islamic bonds (sukuk) in the near future with value estimated at $50 billion (Dh183.65bn), said a report.

Sukuk issuances that saw a massive decline in 2008 have begun to pick up and the recently issued sukuks in the region were heavily oversubscribed.

try{document.write(_banner_zone('zone9339')); }catch(e){} In the Middle East, the Saudi Electric Company issued $1.86bn sukuk which was three times oversubscribed; the Central Bank of Bahrain's sukuk was eight times oversubscribed; and the $1.25bn sukuk by Abu Dhabi-based Tourism Development and Investment Company, advised upon by Clifford Chance LLp, was six times over-subscribed.

In April this year, Indonesia issued its sovereign sukuk of $650 million and was the largest dollar-denominated sukuk outside the GCC. The country aims to launch another sukuk in Fepuary next year.

The outlook for the sukuk market remains positive with Standard & poor's indicating that the total amount of sukuk issued or being talked about in the market is estimated to be about $50bn, according to the DIFC Sukuk Guide, released yesterday.

UAE is the GCC leader in terms of sukuk issuance by value, with a total of $26.8bn from 34 issuances between 2000 and 2008 compared with $4.5bn from 89 issuances in Bahrain over the same period. In spite of being exposed to the challenges of the economic environment, its growth prospects are positive, it said. Sukuk issuances have picked up this year compared to the declining trend that was noticed in 2008, recent reports have said.

Indonesia plans $315m bonds

Indonesia plans to sell 3 trillion rupiah ($315 million) of Islamic bonds to retail investors on Fepuary 10, said Rahmat Waluyanto, Director-General of the Ministry of Finance's debt management office.

The notes, maturing on Fepuary 10, 2013, will be on offer from January 25 to Fepuary 5, Waluyanto said.

"The minimum order will be 5 million rupiah and the maximum order is not limited," Waluyanto said in Jakarta yesterday.

pT Bank Mandiri, Indonesia's largest lender by assets, pT Bank Rakyat Indonesia, pT Danareksa Sekuritas and pT Mandiri Sekuritas were among 16 primary dealers appointed by the government to help sell the Islamic bonds, according to a Finance Ministry document.

Iran to issue €2.5bn bonds

Iran plans to issue bonds worth €2.5 billion (Dh13bn), an amount that could increase to €5bn during the 2010-2011 year.

"Iran is determined to issue bonds worth €2.5bn, which is expected to rise to €5bn next year," Economy Minister Shamseddin Hosseini said, according to Isna news agency. He was referring to the Iranian year, which starts in late March.

By Shveta phatak

© Emirates Business 24/7 2009