Dubai Islamic to arrange 3 Islamic bonds in month

DUBAI: Dubai Islamic Bank said on Sunday it expects to arrange the sale of three Islamic bonds for companies based in the United Arab Emirates of between 500 million U.S. dollars and $800 million each in the coming month.

Islamic bonds, or Sukuk, will be denominated in U.S. dollars and UAE dirhams, Sohail Zubairi, Dubai Islamic senior viceـpresident and head of Sharia coordination, told reporters, adding he expected the sukuk market to pick up pace this year.
"At this stage, we are working on three large Sukuk already ... from between $500 million to $750ـ$800 million," Zubairi said, without giving more details.A global credit crunch triggered by defaults on U.S. home loans had prompted several Gulf borrowers to postpone debt issues last year.

But the Sukuk market has gained momentum, encouraged by bets that Gulf Arab states could revalue their dollarـpegged currencies to dampen soaring inflation.
Currency speculation has prompted investors to pile into securities denominated in local currencies, breathing life back into the Sukuk market.

"I think the market is picking up in the second half of 2008 and it will take off immediately after (the holy month of) Ramadan," Zubairi said.Dubai Islamic, the Gulf region''s fourthـbiggest Islamic lender by market value, has completed over 400 billion dirhams worth of Islamic deals since 2002.

Islamic mortgage lender Tamweel said on July 15 it had sold 1.1 billion dirhams of fiveـyear Sukuk priced at the threeـmonth Emirates Interbank Offered Rate (EIBOR) plus 225 basis points. EIBOR is currently at 2.42 percent.Islamic law bans payment or receipt of interest and bondholders receive returns derived from underlying physical assets, such as rent from property.