December 28, 2006	Thursday	Zilhaj 06, 1427

KARACHI, Dec 27: Dubai Islamic Bank (DIB) will launch $120 million worth of Sukuk bonds for three Pakistani companies, officials told Dawn on Wednesday. The bonds of Karachi Shipyard and Engineering Works (KSEW), Sui Southern Gas Company (SSGC) and a local oil exploration company will be offered in Pakistan and Dubai.

“For the first time a local oil exploration company’s Sukuk bonds of $35 million will be launched internationally which is a historic event,” said Zaffar Masood, Country Business Manager and Head of Corporate Investment Banking of DIB.

He said the oil company would finalise its plan soon and like to launch $35 million Sukuk bonds in Dubai by the first week of January 2007.

Though the government has launched Sukuk bonds, but this will be the first Sukuk by private sector.

He said the DIB would sell Rs4.2 billion of Sukuk bonds for KSEW in installments and Rs1 billion for SSGC. The combine total in dollar terms comes to $85.3 million.

“We are not sure about the exact date of launching of bonds of these two companies but it should be in the first quarter of the next calendar year,” said Masood.

Islamic mode of financing has picked up pace in the country as corporate sector has also started taking it seriously.

Though the Islamic banking has not assumed a significant size yet, but rapid growth could place the Islamic financial system at a reasonably better place in the economy.

Bankers said that a number of companies willing to expand or upgrade their existing infrastructure are planning to avail liquidity through the Islamic mode of financing.

The country’s first domestic Islamic bond issue of Rs8 billion ($133.6 million) was luancehd by Water and Power Development Authority (Wapda) in March 2006.

In the first bond issue of 2005 in the international market, and the first offshore sovereign float, Pakistan had received $1.2 billion offers for Sukuk bonds, of which it accepted $600 million.

“The government’s decision to issue Sukuk and the response by the international market was a clear message for the local industry to consider Islamic bonds and the result is that more and more such bonds are coming in the market,” said an analyst.

He said the Gulf market was ripe for the Sukuk bonds saying that the response to the DIB’s Sukuk for an oil exploration company would further clear the demand for the Islamic bonds.

“Pakistani top companies are quite capable to fetch financing from the Gulf market where untapped huge liquidity still trying to find direction,” he said.