How Islamic bond refinancing will work

Author: | Published: 1 Mar 2009

As companies everywhere struggle to refinance their bonds, Islamic issuers are finding they have peculiar advantages and disadvantages.

The spread on bonds in the Gulf has widened dramatically in the past six months. The swap margin on DP World's 10-year bond from 2007, for example, has widened from 250 basis points to over 900. It was issued at 100 basis points. Similar bonds by Taqa and Qatar have widened to almost 600 basis points from 50 at issuance.

“The world’s economic crisis contains a lot of lessons that we can learn from in the region”
H E Yousef Hussain Kamal, Minister of Economy and Finance, Qatar, opens the congress

Speakers on a debt capital markets panel at the Middle East Financial Law Congress in Doha, Qatar described the difficulties of negotiating over Islamic bonds.

Marisa Drew, co-head of debt advisory and restructuring at Credit Suisse, said:...