Middle East countries including Saudi Arabia, Jordan, Turkey, Iran, Egypt and even Libya have all shied away from raising funds from the Islamic capital market through a debut sukuk issuance citing current market conditions or surplus liquidity as reasons. Yet the International Finance Corporation (IFC), the private sector funding arm of the World Bank Group, has seen fit in going to the market to raise $100 million through a US dollar denominated sukuk issuance.

This, together with Dubai’s current $2 billion sukuk issuance program, and Bahrain’s $750 million sovereign sukuk issuance and Saudi Electricity Company’s offering earlier this year, are further indications of a steadily recovering global sukuk market, which is currently led by issuers out of Malaysia and Asia.

The IFC, in fact, has been more proactive than all the above governments in raising funds from the Islamic financial market, and even set up the first-ever independent, specialized Shariah-compliant housing finance company in Saudi Arabia in April 2007 with Arab National Bank, Dar Al-Arkan Real Estate Development Company and Kingdom Instalment Company. IFC’s Saudi Home Loans Company (SHLC), was designed to promote home ownership by making housing finance affordable for the country’s middle-and-lower-income residents.

SHLC’s specific market mission is to offer these home buyers Shariah-compliant housing finance options to buy apartments, villas and land. The company of course is still waiting for the legal certainty of a Saudi mortgage law which was supposed to have been adopted by the end of 2008 and which, according to Saudi real estate experts, would probably be adopted before the end of this year or in early 2010.

But, aside from the housing market in the Middle East, for which there is huge and growing demand because of the demographics of the region in that more than half of the population are under the age of 30 years old, the aim of the IFC Hilal Sukuk is to help develop the region’s nascent sukuk market and encourage other sovereign and corporate issuers to engage with member countries of the Gulf Cooperation Council (GCC).

For more on this:

http://arabnews.com/?page=6&section=0&article=127999&d=2&m=11&y=2009