Dubai: The United Arab Emirates is in the final stages of creating debt issuance and listing regulations that will help develop a domestic credit market and encourage the sale of Islamic bonds, the market regulator said.
The Securities and Commodities Authority, or SCA, has circulated draft rules that for the first time treat sukuk and non-Sharia compliant debt separately. The regulator is seeking feedback from market participants by the end of the year and "hopes" to enact the regulations early in 2014, according to Obaid Al Zaabi, director of research and development at SCA.
The UAE, the second-biggest Arab economy, must develop local debt markets to help state-run and private companies find alternatives to bank loans, Central Bank Governor Sultan Al-Suwaidi said last month. The country is the only one in the six- nation Gulf Cooperation Council (GCC) that doesn't have a domestic, local-currency debt market.
Global issuance of Islamic bonds, which comply with the religion's ban on interest, will climb to $60 billion next year, Moody's Investors Service said in a report last month, up from about $51 billion in 2013. The rules will boost issuance and listing of sukuk in the UAE, Al Zaabi said.
"Sukuk essentially is not considered as a debt certificate, but rather a certificate of ownership," Al Zaabi said.