Oct 10 The Jeddah-based Islamic Development Bank
(IDB) is considering setting up an Islamic bond
issuance programme in Dubai, in what would be a boost to the
emirate's ambitions to become a global centre for Islamic
It would be only the third such programme from the AAA-rated
IDB, an international institution which has 56 member countries
and promotes economic development in Muslim countries and
communities. It would be the IDB's first sukuk programme in a
Middle Eastern country.
While discussions are at an early stage, the IDB has seen
growing demand for its sukuk and already plans to expand its
main London-listed programme to $10 billion from the current
"The size has not yet been estimated and it may take time,"
Hasan Demirhan, director at the IDB's treasury department, said
of the possible Dubai programme.
"The format will be similar to the existing MTN (Medium Term
Note) format subject to the prevailing regulatory requirements."
In 2005, the IDB set up its maiden programme on the London
Stock Exchange. It has raised close to $7 billion from
15 sukuk there, out of which $6.3 billion are currently
It also has a 1 billion ringgit ($313 million) programme
listed on Bursa Malaysia, which has raised a total of
700 million ringgit via three sukuk since 2008.
In January Dubai announced plans to become a global centre
for Islamic business, and authorities last week outlined a broad
strategy to help accomplish this, including developing the
emirate as a centre for issuance and trading of sukuk.
London and Kuala Lumpur are currently the big global centres
for sukuk, which are structured to obey Islamic principles such
as a ban on interest payments.
Local firms such as Dubai Islamic Bank, Dubai
Electricity and Water Authority and the Emirates
airline have issued and listed sukuk in Dubai this
But IDB sukuk, which are highly sought after by Islamic
investors because of their top credit rating, could offer a
much-needed boost to trading volumes and - perhaps more
crucially - encourage issuers from outside the emirate to choose
Dubai as their listing venue.
Dubai Financial Market said in January it would
issue detailed standards for the issuance and trading of sukuk.
The standards were originally supposed to be issued by March but
a consultation period was later extended to April and a final
version has yet to be published.
"The sukuk standard is now in the final stages and will be
officially launched within the next few months," said a DFM
spokesman, without giving further details.
Support for sukuk issuance is part of a broad cooperation
agreement signed in July between the IDB and the government of
Dubai, which includes efforts to develop areas such as Islamic
endowments and halal standards.
Dubai's other Islamic initiatives include a novel Islamic
commodity trading platform and a push to modernise management of