Sudanese bank to restart Islamic bond sales
Khartoum, October 26, 2012
Bank of Khartoum, Sudan's oldest bank, plans to start selling Islamic corporate bonds, or sukuks, again as the economic outlook for African country improves in the wake of an oil deal with South Sudan, its general manager said.
Fadi Salim Faqih told Reuters the Islamic bank, which is around a fifth-owned by Dubai Islamic Bank, expects to post a record profit this year boosted by strong lending and a substantial windfall from the devaluation of the Sudanese pound.
"A couple of sukuks have been started," Faqih said in an interview, saying the bank could realistically issue $100 million in bonds for local companies by early 2013.
The bank arranged several sukuk issues in 2011, but stopped the sales as Sudan's deep economic crisis raised the risk of default.
Deprived of three-quarters of its oil production when South Sudan became independent in July 2011, Sudan has been struggling with a severe downturn and annual inflation of over 40 percent.
Last month, the two countries agreed to restart oil exports from the South through northern pipelines and a Sudanese port, giving both ailing economies a much-needed shot in the arm.
Much of the Sudanese market is dominated by government-linked banks. Western lenders shun the Arab African country because of U.S. trade sanctions in place since 1997, leaving the market to Gulf lenders such as Qatar National Bank .
Local companies from the aviation, real estate and hotel industries are among those now showing an interest in issuing Islamic bonds, said Faqih.
The Bank of Khartoum, which also owns a South Sudan bank, also plans to fund exports such as livestock, cash crops and iron ore as Sudan expands its mining and agricultural production to offset the loss of oil.
"This year we established a new unit which is specialised in funding exports," he said. It also plans to add 24 new branches to its existing network of 55, he added.-Reuters
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