A number of GCC governments, including those in the UAE and Saudi Arabia, have set ambitious clean energy and energy efficiency targets. As the fastest growing region in the world, the GCC’s population is expected to grow more than 53 million by 2020. Substantial amounts of investments will be required to finance the clean energy and energy efficient projects necessary to meet the needs of the future population.
Capital markets allow investors a low-cost alternative
Green bonds, which tie
In a long anticipated measure, the Saudi Council of Ministers (which is the highest authority in the Kingdom) issued a resolution on 21 July, 2014 authorizing foreign financial institutions to directly buy and sell stocks listed on the Saudi Stock Exchange (Tadawul). The resolution also authorized the Saudi Capital Market Authority (the “CMA”) to set the timing and rules for such participation. On July 22, 2014, the CMA announced that it will publish draft rules for foreign
The Sukuk Opportunity
Total Sukuk issuances for 2013 stood at approximately US$120 billion and the Sukuk market is likely to sustain double-digit growth in the coming two to three years with assets in Islamic finance expected to reach US$2.8 trillion by 2015.
The growth of the Sukuk market has allowed investors to diversify their portfolio and invest in credit that they would not otherwise have access to, such as Islamic institutions, which only raise funds in a Shari’ah-compliant manner. The
In a session on “Current Trends in Islamic Finance” at the In-House Counsel Congress today in Kuala Lumpur, Latham partners Bryant Edwards and Craig Nethercott discussed the opportunities for Shari’ah compliant debt issuance in the United States capital markets.
“US capital markets remain the deepest capital markets and investors in these markets are increasingly interested in chasing yield, including Shari’ah debt yield, from quality issuers,” commented Edwards, chair of Latham’s Middle East Practice. Nethercott, co-chair the firm’s global Islamic Finance
Sipchem’s recent Mudaraba Sukuk is notable as an economic success and also for its structure. The financing represented a great addition to the tool kit available to corporate treasurers in Saudi Arabia.
A Sukuk financing typically requires that: