Not a one-time exercise”: QIB’s CFO on ground-breaking Formosa Sukuk

Published: July 26, 2020

Qatar Islamic Bank broke new ground in the Sharia-compliant market this year when it printed the first ever Sukuk in Taiwan’s Formosa market. The bank’s chief financial officer tells EMEA Finance that the deal is expected to open the way for more similar issuance.

Qatar Islamic Bank (QIB) printed an US$800mn five-year floating rate note at 135bp over three-month Libor in January.

“The entire objective was to diversify in terms of accessing a new market,” Gourang Hemani, QIB’s chief financial officer, told EMEA Finance, “[by] reaching out through new and innovative structures in terms of the Islamic capital markets perspective, so we could get an edge being one of the first movers.”

The deal is listed on the Irish and Taipei exchanges, the latter listing is the key component to printing Formosa debt because it allows Taiwan’s institutional investors to buy it under the jurisdiction’s financial regulations on institutional investors. More issuers are expected to list Sukuk in Taipei as a result of the deal.

“We have paved the way for our peers to be able to go and tap the market,” said Hemani. “One thing that is very clear is that Taiwanese investors only like to engage with good quality investment grade names, preferable with enough cushion in terms of things like capital adequacy and profitability.”

Others agree that this could be the start of an important funding option for names in the Gulf Cooperation Council, but only for the best Islamic issuers.

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