Tilal seeks CMA nod for floating Sultanate's first sukuk issue

06/11/2012 10:46 AST

Tilal Development Company, the premier real estate firm that developed the prestigious Muscat Grand Mall, has approached the Sultanate's market watchdog Capital Market Authority (CMA) to raise funds by way of Islamic debt instrument or sukuk, which will be the first such issue in the country.

"The company officials have unofficially approached us. We have no problem in granting them an approval to raise money by way of a sukuk issue, once they are ready with the plan. They are yet to submit a formal application for the issue,- CMA executive president Abdullah bin Salem Al Salmi, told Times of Oman.

Al Salmi said Islamic debt instruments like sukuks are needed for Sharia-compliant banks to invest their deposits, when they start operation. "CMA is looking at this issue in this perspective and we are encouraging companies to float sukuk issues,- added the CMA chief.

When the Islamic banks start operations, the deposit growth (or growth on the liability side) will be much higher than the anticipated growth in asset side and the Sharia-compliant banks will find it extremely difficult to invest their deposits, if there is a lack of Islamic debt instruments like sukuks in the financial system.

He said only a minor amendment in the Capital Market Law is needed to bring regulation for sukuks, which is in the process.

Tilal Development Company has appointed Amanie Advisory House of Oman, a specialist financial advisory firm active globally in the field of Islamic finance, for advising the real estate firm on the issue.

"Sukuk for us was a natural decision as it allows us the needed flexibility, diversifies our funding base, and should provide significant cost savings to the firm. We are delighted to be working with Dr. Mohd Daud Bakar and his team at Amanie Advisors,- said Eng. Khamis Mubarak Al Kiyumi, chairman of Tilal Development .

Times of Oman