The issuance of Oman’s first sovereign Sukuk will not only provide Islamic banks and takaful companies in the country with an investment avenue but also create a benchmark for the nation’s potential borrowers to access it, says Hussain Ghaleb Al Yafai, Head, of Corporate and Institutional Clients and Head of Financial Markets, Standard Chartered Bank Oman. Muhammed Nafie reports.
The Government of Oman has recently announced the Sultanate’s first sovereign Sukuk issue. Can you explain how Standard Chartered Bank is going to be involved in this? What are the expertise and added value you bring to the table as an advisor to the government on the transaction?
As a leading global sovereign Sukuk arranger, Standard Chartered brings in the Sukuk structuring expertise. With our deep access to Sukuk investors, we will be marketing the Oman sovereign credit to investors regionally. Standard Chartered has helped numerous sovereigns access Sukuk liquidity and diversify their investor base including the Government of Malaysia in 2015 and Hong Kong, Bahrain, Dubai, Sharjah, United Kingdom, Indonesia and Pakistan in 2014. In addition, we have lead-arranged Sukuk issuances for Turkey, Singapore and Qatar and have worked with all sovereign Sukuk borrowers globally on their international Sukuk offerings.
We are ranked number 1 book runner for International sovereign Sukuk offerings from the MENA region from 2011-2015 year to date. We are also ranked number two book runner for International sovereign Sukuk offerings globally from 2011 to 2015.
According to you, how will the debut sovereign Sukuk issue contribute to the growth of Oman’s Islamic finance industry?
The Sukuk will not only provide Islamic banks/ windows and takaful companies operating in Oman an investment avenue but also create a benchmark for the nation’s potential borrowers to access this new pool of liquidity
What will be its impact on Oman’s capital market?
The government’s Sukuk is a key milestone and a step forward towards the development of the capital markets regulatory framework. As capital market issuances play an important role in the economic development of a nation, the OMR Sukuk issuance from the government is definitely a great achievement and will hopefully stimulate further activity in this space.
What do you think about future Sukuk issuances in the country?
Debt capital markets have not been explored by many issuers from Oman in the past and with the sovereign’s Sukuk issuance, I am very hopeful activity in this space will pick up and open up a new source of funding for any eligible borrowers in future.
How is the Islamic finance industry shaping up in Oman and what are the challenges?
In a short span of two years since the issuance of the IBRF, besides the establishment of Islamic banks and windows, the Islamic capital market has seen the launch of the new MSM sharia index, three sharia-compliant investment funds, the first corporate Sukuk, and two Takaful operators. Islamic banking in Oman has made notable progress and now represents approximately five per cent of the total banking sector in Oman. Since the enactment of the Islamic Banking Regulatory Framework (IBRF) by CBO in December 2012, through Royal Decree No 69/2012, Islamic banking sector has grown to comprise two full-fledged Islamic banks and six Islamic windows of conventional banks, offering banking products and services in accordance with the principles of sharia.