Islamic finance - Reach for the sky

New issuance of Islamic bonds has grown sharply over the past year, but is still not enough to satisfy demand from Islamic and overseas investors. It has prompted some to maximise returns on sukuk by leveraging their exposures. Gareth Gore reports

It took just days for Aldar, Abu Dhabi's largest property company, to withdraw the prospectus for its debut $1.3 billion sukuk. Such had been investor demand for the four-year Islamic bond that in mid-February, the firm announced it would be almost doubling the size of the issue to $2.53 billion. Not only that, but investors would be paid a full 10 basis points less than the Libor plus 75bp that had been previously marketed.

It is now clear investors could have been pushed even lower. Trading in