JPMorgan Chase & Co didn’t do enough deals the past two years to rank among the top Islamic-bond underwriters in the Gulf. This year, they’ve leapt to second place, behind only HSBC Holdings. The biggest US bank underwrote $1.3bn of sukuk sales in the six-nation Gulf Cooperation Council in 2014, its best annual performance on record, according to data compiled by Bloomberg. JPMorgan advised on four deals, including for Saudi Electricity Co, while HSBC underwrote $2.49bn in 10 issues.
JPMorgan’s rise comes less than two years after hiring Hussein Hassan from UBS Group, where roles included global head of Islamic structuring, according to a press release from the New York-based lender. The bank is chasing a slice of a market whose financial assets were worth $1.66tn in 2013, according to the Dubai government. It also reflects strength in Saudi Arabia, with all four bonds sold by companies from the kingdom.
“JPMorgan’s position on the league table is a reflection of its recent hires in the Islamic finance space,” Rizwan Kanji, a Dubai-based partner at law firm King & Spalding, said by telephone from Istanbul on Tuesday. “The upturn in sukuk sales in Saudi Arabia, where we have historically seen JPMorgan as a very active player, added to this climb.”
Regional debt markets have witnessed favourable conditions in the past two years and JPMorgan expects “resilience” in 2015, Hani Deaibes, head of Middle East and North Africa debt capital markets at the bank, said in an e-mailed response to questions on Tuesday. “We will continue to build on our client base, heritage in the region and platform” including in the Shariah-compliant space, he said.
HSBC’s Paul Harris, a Dubai-based spokesman for the bank, declined to comment when contacted by telephone on Tuesday. National Bank of Abu Dhabi is ranked fourth, and is the only local bank to make the top five.
Global sales of bonds that adhere to the Shariah ban on interest have risen 14% to $44.7bn this year through December 9, approaching the $46.8bn record set in 2012.
While sales worldwide have increased from 2013, issuance in the GCC has dropped 28% to $14.8bn through December 9 from the same period last year. Sales slowed as Brent crude, the benchmark grade for more than half the world’s oil, sank more than 40% this year. JPMorgan said at the time of his appointment that Hassan was focusing on clients in countries including Saudi Arabia and Malaysia. Malaysia is the world’s biggest market for sukuk, while Saudi Arabia boasts the largest share of Shariah-compliant assets.
JPMorgan also helped arrange sales for National Commercial Bank, Saudi Arabia’s largest bank by assets, and Saudi Telecom Co. Its current position in the kingdom is a “logical extension” of the fact it has been an active adviser, banker and market participant in Saudi Arabia since the 1930s, Hassan, JPMorgan’s head of Islamic finance, said by e-mail on Tuesday.
“The Islamic finance universe is still in full evolution and top league table positions remain up for grabs,” Christian Mouchbahani, managing partner of M Capital Group, a merchant banking group with offices in Dubai, London and New York and business in Saudi Arabia, said by e-mail on Tuesday. “Saudi Arabia will continue to gain in importance for issuers and capital in the global capital markets arena.”
Originally published on www.gulf-times.com