This week we had the opportunity to speak with Mohsin Khan, Senior Fellow at the Peterson Institute for International Economics and the former head of the Middle East department at the International Monetary Fund, ahead of the 2009 Reuters Islamic Banking and Finance Summit. I asked him why he thought that the once red-hot market for Islamic bonds had slowed to a trickle. Khan says some of the largest issuers of Islamic bonds, or sukuk, were real estate developers and the reason corporations are reluctant to buy or issue sukuk these days is due in large part to the continuing decline in the value of real estate in Dubai. Click below to listen:
Kahn on sukuk issues from Reuters TV on Vimeo.
The Reuters Middle East Investment Summit in Dubai was hit by the whirlwind visit of British Prime Minister Gordon Brown across the Gulf as he looked to drum up support for ailing British firms and convince Gulf investors the IMF’s bailout fund was a safe place to put their cash. After courting Saudi Arabia and Abu Dhabi, it was a fleeting visit to the region’s commercial hub Dubai. As his motorcade flew passed the world’s tallest tower But hark…we have seen this before. President George Bush headed to the United Arab Emirates more than a year ago. But that’s where the similarities stop. For Mr Bush, Dubai ground to a halt. Chaos ensued. Streets were closed. Workers sent home. The President was in town, so that was that. Fast forward November 4, 2008. Mr Brown is here. Dubai is business as usual, although The Prime Minister’s motorcade did delay a speaker for the Reuters summit. Perhaps the credit crunch has meant random days off are no longer on the Dubai agenda……. unless you’re the President of course.