Lack of Islamic secondary markets mitigates expansion and growth opportunities.
“KFH succeeded in developing Islamic financial services and capital markets during the last 2 decades through participation in Sukuks issuance and efforts to develop Sukuk markets” said Mr. Emad Al-Monayea, Board Member and CEO – KFH Investment Company. KFH has participated in the issuance of Sukuks of various governments and companies in GCC countries, Turkey, Japan, United States, Britain and South Africa. KFH provides technical support to entities intending to issue Sukuks in order to enable them to issue Sukuks successfully without any hindrance or obstacles.
Mr. Al-Monayea, in a presentation delivered at Euromini Conference at London named “Islamic Finance & Investment” highlighted KFH experiment in Sukuk issuance in general, namely during the year 2014 and the support which it has provided to make all Sukuk issuance deals a success. KFH subscriptions surpassed the required amounts. KFH played a significance role as a guarantor for the success of new Sukuks issuances due to the trust which KFH enjoys globally among investors and global markets. KFH has participated remarkably in the diversification of customers funding, increase number of Sukuk issuers and the size of amounts invested in this field.
Mr. Al-Monayea reiterated that KFH shall endeavor to increase the issuance of more Sukuks for governments and companies worldwide in order to reinforce and support the role of this product. This product is considered as the legislative substitute for bonds and participates in providing finance for several projects in an innovative manner and sound mechanism. KFH seeks to reinforce and support Islamic banking role in major projects and increase development efforts in various societies.
Mr. Al-Monayea indicated that sufficient efforts are exerted in the issuance of Sukuks and several countries and marjoram companies have shown great interest in this product. However, the lack of secondary Islamic markets is still mitigating the possibilities of expansion and growth in this vital and axillary activity in the world of Islamic banking. Several countries lack appropriate laws to organize the issuance and dealing process of Sukuks. Sukuks are one of the tools through which banks are able to manage liquidity in case there is a secondary market for issuance of Sukuks.
During the conference, representatives of South Africa emphasized their experience in the first issuance of sovereignty Sukuks last September and how this matter has participated in facilitating Islamic economy affairs. Several entities have adopted this type of finance and investment. They highlighted KFH role as one of the main organizers of these Sukuks. These Sukuks are considered as the first sovereignty Sukuks in Africa. Significant assets were used to issue these Sukuks. Accordingly, Sukuks were given considerable rating by major global rating agencies e.g. Moody’s, Fitch, Standard & Poor’s.
The size of Islamic finance sector exceeds US$ 1.8 trillion and witnesses a rapid growth which is expected to surpass 20% during the next few years.