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Global Sukuk Market - Overview & Trends Current Status, Developments and Key Challenges

IIFM Annual Seminar at Pre-Conference Day of World Islamic Banking Conference (WIBC)

4th December 2017, ART Rotana Hotel, Amwaj Islands, Kingdom of Bahrain

Ismail Dadabhoy

Advisor

IIFM

Sukuk Market Current Status

a) Total Global Sukuk Issuances (International & Domestic)

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Total GLOBAL Sukuk Issuances (Jan 2001 – September 2017) All Tenors, All Currencies, in USD Millions

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Total Global Sukuk Issuances as September 2017 USD 918,913 Millions

Source: IIFM Sukuk database

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

Total INTERNATIONAL Sukuk Issuances (Jan 2001 – Sept 2017) All Tenors, All Currencies, in USD Millions

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Total International Sukuk Issuances as of September 2017 USD 212,727 Millions

Source: IIFM Sukuk database

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Total DOMESTIC Sukuk Issuances (Jan 2001 – September 2017) All Tenors, All Currencies, in USD Millions

Total Domestic Sukuk Issuances as of September 2017 USD 706,186 Millions

Source: IIFM Sukuk database

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

Sukuk Market Current Status

b) Total Global Sukuk Issuances – Breakdown by Issuer Status

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Global Sovereign Sukuk Issuances (Jan 2001 – Dec 2016)

All Tenors, All Currencies, in USD Millions

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Global Quasi-Sovereign Sukuk Issuances (Jan 2001 – Dec 2016)

All Tenors, All Currencies, in USD Millions

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Global Corporate Sukuk Issuances (Jan 2001 – Dec 2016)

All Tenors, All Currencies, in USD Millions

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Global IFI’s Sukuk Issuances (Jan 2001 – Dec 2016)

All Tenors, All Currencies, in USD Millions

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DOMESTIC Sukuk Issuances by Issuer Status All Tenors, All Currencies, in USD Millions

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DOMESTIC Sukuk Issuances by Issuer Status All Tenors, All Currencies, in USD Millions

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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INTERNATIONAL Sukuk Issuances by Issuer Status All Tenors, All Currencies, in USD Millions

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INTERNATIONAL Sukuk Issuances by Issuer Status All Tenors, All Currencies, in USD Millions

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Sukuk Market Current Status

c) Total Global Sukuk Issuances - Country Wise Breakdown of Global Issuances

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

REGIONAL BREAK-UP OF GLOBAL ISSUANCES (JAN 2001 - DEC 2016)

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REGIONAL BREAK-UP OF GLOBAL ISSUANCES (JAN 2001 - DEC 2016) Continuation

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Sukuk Market Current Status

d) Global Sukuk Issuances – Structural Breakdown (International & Domestic)

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Structural Breakdown of INTERNATIONAL Sukuk Issuances - All Tenors, All Currencies, in USD Millions

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Structural Breakdown of INTERNATIONAL Sukuk Issuances - All Tenors, All Currencies, in USD Millions (continued)

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Structural Breakdown of INTERNATIONAL Sukuk Issuances - All Tenors, All Currencies, in USD Millions (continued)

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Structural Breakdown of DOMESTIC Sukuk Issuances - All Tenors, All Currencies, in USD Millions

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Structural Breakdown of DOMESTIC Sukuk Issuances - All Tenors, All Currencies, in USD Millions (continued)

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Structural Breakdown of DOMESTIC Sukuk Issuances - All Tenors, All Currencies, in USD Millions (continued)

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Sukuk Market Current Status

e) Global Outstanding Sukuk (International & Domestic)

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Total GLOBAL Sukuk Outstanding as of 31st December 2016

All Tenors, All Currencies, in USD Millions

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Total GLOBAL Sukuk Outstanding by Issuer Status as of 31st December 2016, All Tenors, All Currencies, in USD Millions

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Total DOMESTIC Sukuk Outstanding as of 31st December 2016, All Tenors, All Currencies, in USD Millions

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Total DOMESTIC Sukuk Outstanding by Issuer Status As of 31st December 2016, All Tenors, All Currencies, in USD Millions

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Total INTERNATIONAL Sukuk Outstanding As of 31st December2016, All Tenors, All Currencies, in USD Millions

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Total INTERNATIONAL Sukuk Outstanding by Issuer Status As of 31st December 2016 (in USD Millions)

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Country Wise Breakdown of GLOBAL Sukuk Outstanding As of 31st December 2016, All Tenors, All Currencies, in USD Millions

IIFM Seminar at Pre-Conference Day of WIBC, 4th December 2017, Bahrain

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Key Challenges In Sukuk Issuances

1) Limited availability of tangible assets leads to over reliance on certain Sukuk structures

2) Asset title transfer law particularly for sovereign assets

3) Investor’s preference and risk appetite tilted towards balance-sheet risk rather than direct risk on a tangible asset

4) Tax Neutrality

5) Quasi Sovereign Sukuk Implicit and Explicit Government Guarantee

6) Currency & Rate of Return risk mitigation

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Islamic Hedging and its Role in Sukuk Market Development

IIFM-ISDA Hedging Standards

Tahawwut (Hedging) Master Agreement

Islamic Foreign Exchange Forward (IFX Forward)

Islamic Cross-Currency Swap (ICRCS)

Islamic Profit Rate Swap (IPRS)

Islamic Credit Support Deed for Cash Collateral (VM)

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Thank You

International Islamic Financial Market (IIFM) Office No. 72, 7th Floor, Zamil Tower , P.O. Box: 11454, Manama, Kingdom of Bahrain Tel: +973 17500161 , Fax: +973 17500171, Email: info@iifm.net, Website: www.iifm.net Disclaimer: The information herein has been obtained from sources believed to be reliable but cannot be guaranteed. The views or opinions expressed are subjected to change at any time. Neither the information nor any opinion expressed can be construed as a solicitation for the purchase or sale of any securities. International Islamic Financial Market disclaims liability in this respect.