Sukuk and security markets highlighted at the Oman Islamic Banking and Finance Conference 2012

Mr. Ifzal Akhtar, Islamic Finance Solicitor and Lecturer, Birmingham, England enlightened attendees on The Role of the Islamic Bank and the lessons to be learned from the Goldman Sachs Sukuk fallout quoting "The Goldman Sachs issue is a topical issue which has risen after Goldman Sachs issued a sukuk in October last year. After the issuance, there was some questions about whether Goldman Sachs issued a sukuk which was Sharia'h compliant which originally came from people who were not qualified to comment on the same. The lesson for Oman is that this is an example of how not to do things. When I say how not to do things, it means how not to handle controversy. Whenever you have a situation where you issue a product and someone questions it, it is always important to deal with the situation head on. At the end of the day no product will be issued without the backing of scholars which means there is a scholarly opinion which supports the transaction or instrument as Halal. Therefore the banks in Oman once they have a fatwa, should issue and strongly defend their products."

Mr. Hussain Al-Yafai, Director-Debt Capital Markets, MENA, Standard Chartered Bank in his topic of Raising Debt Capital via Sukuk Markets stated that "It's very important to develop the local currency sukuk markets and Oman will hopefully take a key step towards that progress. The benefits of the Sukuk are that at the end of the day it's a senior unsecured obligation of the issuer, so it's very similar to a conventional bond in terms of its benefits. You get a longer tenure. By looking at the sukuk markets, you get to tap both liquidities-Islamic liquidity and the conventional liquidity, so you get a very healthy participation rate. More people are turning to Sukuks because there is a pent up demand from an Islamic liquidity point of view, there are lots of Islamic accounts that are placing their funds with banks at zero profit, so when they see an opportunity that will get them a bit more profit they would really grab it."

A Panel Discussion entitled Challenges and Opportunities in Islamic Securities Market in Oman was moderated by Mr. Noaman Abdul Majid, Country Manager-Oman, Pak Oman Investment Company and saw panelists including the above two speakers along with Mr. Anzal Mohammed, Partner-International Capital Markets, Allen & Overy LLP, sharing their views on the topic of discussion.

Mr. Mohammed said "It is important that the government of Oman takes the lead in the development of the Islamic Finance industry in Oman to make sure that the right rules and regulations are put in place and foundations are set in order for the industry to flourish. It is important that the government publicly demonstrates its commitment to Islamic Finance and in order to do that an international sukuk transaction from the government of Oman is a very important public statement of intent in terms of how the government views Islamic Finance generally and also allows other government related entities and corporates to follow as well, so from a public perception perspective, it's a very real and positive step in terms of how the government can demonstrate that."