has spread widely and due to the huge returns from investing in Islamic bonds or sukuk, more and more people are investing and utilizing the proceeds in paying off debt relief services. The sale of Islamic bonds by the banks of the Persian Gulf countries may rise up to $1.5 billion in the month of October, 2010, that will be highest in record. This positive statistic is luring investors to invest in the Persian Gulf banks that are supporting the Islamic finance.
It has been reported that a multilateral Jeddah-based bank in the Persian Gulf has sold $500 million sukuk bonds with maturity of 5 year and they have yielded 40 points and has again set new standards for Islamic finance investment. Abu Dhabi Islamic bank and
the UAE, which the second-largest among Islamic banks are also expected to put up for sale $1 billion of Islamic debt. Such offerings would fetch $2.5 billion of issuance this year from the financial institutions.
After the two years of provisioning and write downs, most banks in the Persian Gulf are going ahead as they are the ones who are always in need of cash flow. The sale of Islamic bonds from the 6 countries that constitutes the GCC (Gulf Cooperation Council)
is increasing after the Agreement of the Dubai World. It was agreed in this meeting that 99% of the creditors will amend the terms and conditions on the borrowings worth $24.9 billion and reduce the hazard that the company can default and thus strengthen the
appetite of the investor for debt in that particular region. With such financial changes, economic growth will step up to 4.1% in the year 2010, from a 2% in the previous year in the Middle East and North Africa.
The sale of the Shariah-compliant bonds by the Gulf financial institutions and banks have also escalated 15.5% in the year 2010. Islamic notes that were sold by the issuers have returned to 12.2% within this same period. The Islamic debt in the developing financial markets has increased by 15.8%. The average yield in the Islamic bonds has maintained a consistent rate and this is attracting most investors to invest in the Islamic financial market. Especially, those who are mired in debt can easily eliminate their debt burden by utilizing the proceeds of Islamic bond investment in paying off debt relief services.
