In an interview Doug Bitcon, Director of Capital Markets for the European Islamic Investment Bank based in London, talks Secondary Market Sukuk with Sukuk.net.
Sukuk.net: What kind of volumes are you doing in secondary market Sukuk trading?
Doug Bitcon. "Secondary market trading volume has contracted significantly in the first half of 2008 when compared to 2007 where we traded Sukuk with a nominal value of approximately $0.5bn".
Sukuk.net. What role apart from trading does European Islamic Investment Bank play in Sukuk?
Doug Bitcon. "EIIB's modus operandi is origination, structuring, underwriting (where required) and primary market distribution".
Sukuk.net. Do you see European Islamic Investment Bank becoming a market maker in the secondary trading of Sukuk?
Doug Bitcon. "EIIB does not seek to become a liquidity provider to the sukuk market as a whole. We focus instead on servicing the liquidity requirements of second tier sukuk investors who are not generally covered by the big banks. We have traded with most of the large investment banks during the course of our activities but those trades have generally been a by-product of our primary focus".
Sukuk.net. Do you see any opportunities for retail customers in Sukuk?
Doug Bitcon. "Sukuk in the UK represent an interest in collective investment schemes, none of which have been authorised, recognised or approved by the FSA. Distribution to retail investors is therefore currently prohibited. Similar restrictions apply in the Gulf.
This has not been an issue to date as Islamic retail investors typically seek equity exposure and the higher potential returns available rather than the more predictable but lower sukuk returns.
As the market develops and Islamic retail investors seek to diversify their investment portfolios away from pure equity exposure, Islamic pension and other fund types will be developed to cater for the needs of the retail investor".
Sukuk.net. What impact has the "credit crunch" had on Islamic instruments in the Capital markets?
Doug Bitcon. "Lower issuance, significantly higher profit margins paid by Issuers, less demand from traditional sukuk investors, majority of sukuk now trade below par in the secondary market, increased issuance of exchangeable / convertible paper
© 2008 Sukuk.net
