Dubai IFC to issue $700 million Islamic sukuk bonds

Dubai International Finance Centre will be issuing Islamic sukuk bonds worth $700 million next month, it has announced.

Dubai has become more and more important as a financial hub for the Gulf region. A growing number of companies are choosing to set up there and its reach is becoming increasingly global. With the announcement of a large-scale new sukuk next month, it is consolidating its position in the Islamic finance category.

Governor and executive chairman Essa Kazim of the Dubai International Finance Centre (DIFC) announced the move last weekend, on 21 September, at the same time as the finance hub’s half-year operating review.

Mr Kazim said DIFC will issue a $700 million sukuk in October in a bid to refinance its existing bank borrowing and support a new phase of growth.

DIFC is currently working on new projects such as its Gate Village office development, which will add another 115,000 square feet of leasable office space onto its existing offerings. At the same time, DIFC is also in the final design phases of a new huge retail strip that will run through the centre and connect most of its buildings.

The sukuk, or bond sale, will be in the form of an ijara, with rent on an asset taking the place of interest in order to comply with Islamic law. That represents an important step in Dubai’s overall growth strategy – Islamic finance has been identified as a key growth market for DIFC.

The review showed that the number of active companies operating in DIFC rose by seven per cent from the last half of last year to 1,113.

Registered financial services firms in the hub grew from 327 to 350, while non-financial services businesses actually jumped from 565 to 600 altogether. Employment rose too, with a six per cent bigger workforce over the period. Some 16,560 people now work in DIFC.

Mr Kazim says that if current growth rates are maintained, Dubai is on track to reach its ambitious target of doubling in size by 2018.

“As we move into our next decade of operations, we will continue to strengthen our offer, which is helping to transform Dubai into a global hub for business and finance,” he said.