GCC Sukuk

GCC Sukuk investors felt the pain of two negative developments over the last few weeks a)
increasing UST benchmark yields and b) declining oil prices. Total return on Emirates NBD
Markit iBoxx USD sukuk index closed the month of June with loss of -0.28% mainly
accounted by capital losses.

One of the topical news that kept investors on the edge during the month was the ongoing
saga with restructuring of the DANA gas sukuk. Initial court hearing is set for 25th December
2017. A court decision in favor of Dana Gas would not only be significantly disadvantageous
to the Dana gas sukuk holders but will also test sukuk regulatory and legal frameworks in
the U.A.E. as a jurisdiction. Surprisingly DANA sukuk prices are still well above the $85 mark
reflecting investor optimism about recourse to the issuer under the English Law even if sukuk
gets classified as non-sharia compliant. Purchase of about 5% stake in Dana Gas by the
Goldilocks Investment, part of Abu Dhabi Financial Group, also boosted investor confidence
somewhat.

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