Bookbuilding is close to completion on a five-year sukuk for Kuwaits National Industries Building Materials Company, following roadshows in London, Kuala Lumpur and Manama. The size of the issue will be $70 million-100 million and the price is expected to be in the region of 100 basis points (bp).

Kuwait Finance House (KFH) is lead managing the issue and the participating banks are

Gulf International Bank, Liquidity Management Centre and Standard Bank. The

paper will be listed on the Dublin Stock Exchange the first

sukuk to be listed there. KFH, through its Malaysian subsidiary, is also working on arranging the first corporate sukuk out

of China.

The first tranche of the sukuk issue by Qatar Real Estate Investment Company was also launched in mid-September, following roadshows in early August. Arranged by Qatar National Bank (QNB) through Islamic subsidiary QNB al-Islami, the instrument was four times oversubscribed. Three further drawdowns in November, February and May will take the total size of the issue to $270 million. The tenor is 10 years, callable in five, and the margin is 120 bp (MEED 18:8:06).

Roadshows kicked off in the Gulf on 17 September for the sukuk issue by Sharjah Islamic Bank, expected to be worth about $200 million. The tenor is five years and HSBC is the sole lead manager and bookrunner (MEED 15:9:06).

A $150 million musharaka sukuk for Kuwaits Investment Dar was formally closed and issued in mid-September. The five-year issue, arranged by Unicorn Investment Bank and WestLB, is priced at 125 bp for the first three years and 175 bp for the final two (MEED 14:7:06).

Sukuk issuance is expected to increase out of Saudi Arabia during the remainder of the year, following the successful SR 3,000 million ($800 million) instrument recently launched by Saudi Basic Industries Corporation (Sabic) and priced at 40 bp. HSBC was the lead manager.

Total subscriptions were received of about SR 4,300 million ($1,147 million). Allocation was distributed about 49 per cent to pension, mutual and other funds, 15 per cent to corporates and other institutions and 36 per cent to banks treasuries fulfilling Sabics aim of diversifying funding sources.

'Several issuers have been waiting to see how the Sabic

deal goes before coming

to market, but I think some

will now look to approach investors by the end of 2006,' says

a Riyadh-based banker. Al-Rajhi Bank, Bank Albilad and Bank Aljazira are among those understood to be considering using

the Islamic paper as a fund-

raising tool.

The Trowers & Hamlins report calculates the total volume of non-sovereign Gulf sukuk issuance during the first half of 2006 at $4,585 million, a 117 per cent year-on-year increase. The growth of Islamic investment funds is identified as a key driver, in addition to the growing familiarity of international investors with the instruments.

'Foreign investors represent an increasingly dominant segment of the market for Islamically-compliant debt,' says Neale Downes, Bahrain-based partner for Trowers & Hamlins. 'What is really significant

is that they are now comfortable buying corporate sukuks

and not just those issued by sovereign borrowers.'