Dana sukuk: why the market is overreacting

Author: Lizzie Meager | Published: 14 Jul 2017

The sukuk issued by Sharjah-based Dana Gas and recently denounced as non-shariah compliant will not damage confidence in the Islamic debt markets, as some have claimed.

The gas provider’s announcement in June that $700 million worth of its bonds, issued in 2013, are not compliant with shariah law in the United Arab Emirates (UAE) perplexed the market.

Franklin Templeton is one of many investors in the Dana Gas sukuk. The firm’s chief investment officer for sukuk and MENA fixed income Mohieddine Kronfol said that the impact of this restructuring will be insignificant to the wider industry in the long-term.

Dana Gas is owed around $1 billion from Iraq and Egypt"Dana Gas is only one issuer in a global sukuk market with over 90 issuers," Kronfol said. "The media and public attention spent on Dana Gas is out of proportion with what has transpired so far, which is one...