Despite a slump in the Shariah bond market last year, HSBC says that it expects more corporations to be tempted back next year following a revival of confidence in the wake of the highly successful sale of Indonesia’s first global sukuk in April.
“We believe that many Indonesian companies are still interested in issuing sukuk, although maybe not this year, but in 2010,” said Mahmoud Abushamma, head of HSBC Amanah Indonesia, HSBC’s local Shariah unit.
“Indonesia’s sukuk reinvigorated the global Islamic bond market this year,” Mahmoud said. “Given the successful sale of $650 million worth of bonds, and with demand amounting to $4.7 billion, there’s clearly still a lot of potential funding out there.”
He said that since the April sale, the market had been transformed by further global sovereign and corporate issues, like Bahrain’s $750 million global sukuk in July, and Petronas’s $1.5 billion sukuk last week.
A number of non-Muslim countries, including Hong Kong, Japan and South Korea, are also expected to tap the Shariah bond market next year, he added.
Mahmoud said Indonesia’s major competitor in the Islamic bond market continues to be Malaysia, but that with the neighboring country’s economy already nearing maturity, developing Indonesia offered enormous potential by comparison.
He said HSBC Amanah expected two more local corporate sukuk issues this year, each worth about $50 million.
Demand for sukuk is increasing, Mahmoud said, as the establishment of more types of Shariah businesses — including banks, fund managers and insurers — heightened the profile of the Islamic bond market among retail investors.
“And demand is not only coming from Muslims,” he said. “Some 30 percent of HSBC Amanah’s customers are non-Muslims.”