David Testa, Executive Director of DDCAP Group™, was pleased to attend the formal launch of the IIFM Sukuk Report and to be a panellist discussing ‘Sustainable Development Goals and the Evolving Sukuk Landscape’.
The well-attended webinar began with an opening address from Nik Mohamed Din Director General, Labuan Financial Services Authority, who provided an update on digital Sukuk and the potential use of blockchain, an area that the Labuan authorities are taking a particular interest in. The keynote address was from Dr Sami Al-Suwailem, Acting Director General of the Islamic Development Bank Institute, who also focused on the area of digitisation and artificial intelligence, where he believes information transparency will empower investors in Sukuk issuance.
The difficult market conditions facing Sukuk issuers in 2022 following the Russian invasion of Ukraine was analysed both by Ijlal Alvi, CEO of IIFM, in his formal launch of the report, as well as by the following panel, which discussed Global Sukuk Market Trends in 2022. In a wide-ranging session, reflecting panellists from leading Sukuk arrangers Standard Chartered Bank, Kuwait Finance House, CIMB Islamic Bank and Bank ABC Islamic as well as international law firm White & Case, topics discussed included the recovery of investor appetite in the current calendar year after the challenges of 2022, as well as the on-going impact of recent Shariah standards. Debashis Dey of White & Case highlighted the impact of the newly-introduced tangibility ratios on corporate Sukuk issuance, whilst noting that financial institutions were in a better position to comply with this particular aspect of AAOIFI Standard 59. Dr Ayaz Ismail of CIMB Islamic highlighted, however, that the Sukuk market in Malaysia continued on its course of robust success, noting that this particular Standard was not applied in Malaysia, while Dr Scott Levy (CEO of Bedford Row Capital) noted the widening universe of potential Sukuk issuers, with crowd-funding offering the chance of issuance levels well below traditional benchmark sizes as corporates looked to utilise new technological and regulatory advances.
There followed two specialist presentations, with Arief Hartawan, Head of Shariah Economic and Finance Department at Bank Indonesia, and Dwi Irianti Hadiningdyah from the Indonesian Ministry of Finance, focusing on the growth of the Sukuk market in Indonesia. They focused especially on the potential of cash-linked Waqf Sukuk. There was also an insightful presentation by Zakky Bantan, who is a Head of Funding and Manager Capital Market Division at the Islamic Development Bank, who showcased the landmark issues from the Bank in recent months, and in particular their focus on both social and green finance.
This led neatly into the final session of the day, which was the panel discussing the SDGs and related Sukuk issuance. Chaired by Mustafa Adil of the London Stock Exchange Group, the panel included – in addition to David Testa – Lilian Le Falher, Head of Treasury and Capital Markets at Kuwait Finance House-Bahrain, Ahmed Jan, General Manager Treasury at the International Islamic Trade Finance Corporation (ITFC), Luma Saqqaf, CEO of Ajyal Sustainability Consulting and Dr Hatim El-Tahir, a director at Deloitte & Touche. The panel noted the continued growth of ESG-related Sukuk issuance, drawing a clear distinction between issues where proceeds would be used to support the UN SDGs and the much smaller universe of issuance where returns are related directly to green initiatives. Ahmed Jan led a discussion on carbon markets, an area where the ITFC has taken a market-leading role, whilst the panel agreed that regulatory initiatives recently seen globally – in particular the first two standards from the International Sustainability Standards Board – were a positive attempt to simplify requirements in what can be a complex area, particularly with regard to efforts being made to enhance the transparency of corporate disclosures.