Sukuk: safe investment in Qatar and Gulf countries in 2016
The QIIB’s Sukuk’s issuance goes up to 20 points with regard to June and it follows Qatar’s and Gulf countries’ economic growth.
Sukuk is a shariah compliant financial instrument, equivalent to the bonds, but being all repayments to investors based on dividends and excluding interest.
This Sukuk issuance is reverting, according to Moody’s, the capital reduction suffered by QIIB after a continued growth during the period 2011-15 enhancing the bank’s liquidity.
The QIIB’s Tier 1 capital increase to 20% from a 16.6% in June, indicates a considerably stronger buffer to absorb potential losses as the economy and oil prices continue going down and asset quality weakens in general. But the Sukuk will also support the bank’s continued balance-sheet expansion.
QIIB’s compound annual growth rate was 27% during the period 2011-14, ten points above Qatari banks’ average, but in 2015 went down to 14%.
Moody’s indicated that Qatar‘s economic growth remain constant and foresees strong solid capital buffers not only in QIIB but in Qatar, for the next 12 to 18 months.
The Islamic finances’ market, despite being still underrepresented as an investment choice globally, even in Islamic countries, is demonstrating the strength of ethically based investments.
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Del Canto Chambers’ Editorial board.