Sukuk as part of a Global Allocation Strategy

1. Sukuk as part of a Global Allocation Strategy IFN Conference – London July 2011

2. Investment opportunity + Diversification benefits + Socially Responsible Investing sukuk market - a new asset class

3. Why invest in the Sukuk market? • Sukuk, like bonds, are relevant in asset allocation decisions • Their medium term profile offers potential for greater returns’ stability over an investment horizon • Active secondary market with liquidity improving constantly • Benchmark size issuance allows for effective allocation without investing in more than 10% of an issue • Generally rated by the major Rating Agencies • Provides exposure to growing global regions – Gulf Cooperation Council (GCC) and Asia • Solid GDP growth even in stressful world economic conditions • Wide array of infrastructure projects • Increasing world demand for hydrocarbon products and commodities • Credit Ratings continue to improve across GCC and Asia regions for Sukuk • Strong technical market positioning • Anchors the development of the global Islamic financing market • Many compelling reasons including…

4. Sukuk - A New Asset Class • Underlying Economic Strength… Source: IMF, CIA, Indexmundi.com, Bloomberg, BP and Wikipedia, Bank Negara Malaysia Most data is referenced to the 2009 data where available

5. Sukuk - A New Asset Class • Large sovereign and sovereign related exposures at 80% of all global Sukuk • Quasi Sovereign: Emirates of UAE, Petronas, Khazanah, Central Bank of Bahrain • Strength that should reassure investors in uncertain economic times… Sector Exposure Global Sukuk with minimum USD 200MM as of April 29th 2011 e.g. Petronas Khazanah Dubai Government Ras Al Khaimah Central Bank of Bahrain Agencies (e.g. Dubai Electricity and Water Authority, DIFC) GLC – Government linked companies e.g. DP World Abu Dhabi Islamic Bank Dubai Islamic Bank Malayan Banking Source: Bloomberg , BNP Paribas Investment Partners

6. Sukuk - A New Asset Class • While the return history is short, the index has performed well vis-a-vis equities • Caveat: The drop in Sukuk returns during 4Q08 was driven by the small number of index constituents and the decline at the end of 2009 was the result of the Dubai World restructuring • Potential solid cumulative returns versus broader markets… Cumulative Performance vs. Bond Indices Cumulative Performance vs. Equity Indices Month End USD Return from Sep 2005 to Apr 2011 Month End USD Return from Sep 2005 to Apr 2011 DJSUKUK = Dow Jones Citigroup Sukuk Index, JACI HG = JP Morgan Asia Credit High Grade Index, MSCI Asia x Jp = MSCI Asia excluding Japan. BC = Barclays Capital. All indices are quoted in USD terms. Past performance or achievment is not indicative of current or future performance. Source: Barclays, MSCI, Bloomberg, JP Morgan, Citigroup, BNP Paribas Investment Partners

7. Sukuk - A New Asset Class • Structural demand for Sharia compliant assets with strong growth and greater participation from select institutional investors; • Islamic banks, • Pension fund, • Takaful – Islamic insurance companies • Attractive structural demand prospects …

8. Sukuk - A New Asset Class Correlation of Monthly USD Returns • Exclusive return profile –typical of an asset class… Monthly returns from Oct 2005 to April 2011 Sukuk indices performed similar to Treasuries despite being impacted by the financial crisis of 2008 and the Dubai World Restructuring in 4Q 2009 Equities have higher volatility DJSUKUK = Dow Jones Citigroup Sukuk Index, JACI HG = JP Morgan Asia Credit High Grade Index, MSCI Asia x Jp = MSCI Asia excluding Japan.BC = Barclays Capital. JPM = JP Morgan. All indices are quoted in USD terms. Past performance or achievment is not indicative of current or future performance. Source: Barclays, MSCI, HSBC, Bloomberg, JP Morgan, Citigroup, BNP Paribas Investment Partners

9. Sukuk - A New Asset Class Correlation of Monthly USD Returns • As with any other asset class it has its own diversification profile… Monthly returns from Oct 2005 to April 2011 DJSUKUK = Dow Jones Citigroup Sukuk Index, JACI HG = JP Morgan Asia Credit High Grade Index, MSCI Asia x Jp = MSCI Asia excluding Japan.BC = Barclays Capital. JPM = JP Morgan. All indices are quoted in USD terms. Past performance or achievment is not indicative of current or future performance. Source: Barclays, MSCI, HSBC, Bloomberg, JP Morgan, Citigroup, BNP Paribas Investment Partners

10. Sukuk - A New Asset Class • Unconstrained Global Sukuk portfolio average rating A has a high yield of 4.69% vs. similarly rated indices • Provides true credit alpha not just a beta play… Composition of Yield (%) As of April 29th, 2011 Indices include only investment grade bonds Index includes non investment grade bonds Account underlying yield characteristic. It has the highest credit spread Average Credit Quality Source: Barclays, HSBC, Bloomberg, JP Morgan, Citigroup, BNP Paribas Investment Partners Past performance or achievment is not indicative of current or future performance.

11. Sukuk - A New Asset Class • Currently excess spread is superior than other “A” rated conventional indices. • Unconstrained Sukuk Account “out yields” Global Aggregate or Global Treasury indices as at end of April 2011 • Higher yield, lower duration and similar credit quality Dow Jones Citigroup Index vs. Other Bond Indices Spread over Treasury vs. Duration Data as of Apr 29th, 2011 Data as of Apr 29th, 2011 Increase spread potential and reduce duration risk * The duration generally refers to Modified Duration except for the DJSUKUK, where it refers to Spread duration given the high composition of floaters in the index, as duration as measured by modified duration is limited Source: Barclays, HSBC, Bloomberg, JP Morgan, Citigroup, BNP Paribas Investment Partners. Past performance or achievment is not indicative of current or future performance.

12. Sukuk - A New Asset Class • The Sukuk Index offer the potential for an attractive return profile under different interest rate scenarios • Credit spreads tend to have a negative correlation to US Treasury rates movements • tables below assumed credit spreads to remain constant • Robust returns expected even in a rising interest rate scenario Simple Annual Return over 2 years (%) Simple Annual Return over 1 year (%) Varying levels of Treasury Rates* as of Apr 29th, 2011 Varying levels of Treasury Rates* as of Apr 29th, 2011 * Rates are assumed to rise gradually over the respective period. Source: Barclays, HSBC, Bloomberg, JP Morgan, Citigroup, BNP Paribas Investment Partners

13. Sukuk - A New Asset Class • The Sukuk Index (A1/A2) spread remains higher compared to that of Barclays Capital US A Rated Corporate index (A1/A2) and comparable to JACI High Grade index (A2/A3) • Swift support by GCC Governments in 2009 lessen refinancing risk of maturities. • Dubai World’s restructuring was well supported by creditors; both actions helped to reduce overhang in the market. • A brief history of spread behaviour… Credit Spreads (bps) of DJSUKUK vs. Other A rated Corporate indices* Month end Yield between Oct 2005 and Apr 2011 Oct-08: Global government effort to support financial system + quantitative easing Feb-09: UAE Central Bank recap banks and supports Dubai Government Mar-10: Dubai World Restructuring Agreement announced Sep-08: Lehman Brothers bankruptcy Mar-11: Dubai World Restructuring completed Nov-09: Dubai World Restructuring. Spreads were similar between DJSUKUK, JACI High Grade Index and US “A” rated corporate prior to the start of sub prime crisis Mar-08: Bear Sterns bankruptcy Spreads of DJSUKUK is similar to JACI High Grade Index and higher vs. US “A” rated corporate Jun-07: Start of Sub Prime Crisis • * DJ Sukuk and “A” rated US Corporate refers to OAS spread while JACI High grade spread refers to spread over treasury. Past performance or achievment is not indicative of current or future performance. Source: Barclays, HSBC, Bloomberg, JP Morgan, Citigroup, BNP Paribas Investment Partners

14. Sukuk - A New Asset Class • Normalization of volatility of past distress periods is reflected by: • 1998 : LTCM / Russian debt crisis • 2001-02 : September 11 terrorist attack, Enron and WorldCom bankruptcies • Expected decline in volatility increases probability of positive returns • After a violent jump in volatility… Returns & Normalization of Volatility Volatility Behavior post Systemic Stresses Rolling 1 year volatility of excess credit returns (%) Based on monthly excess return data from Jan 1997 to Jul 2009 Return Expected Volatility Sep 11, and major investment grade bankruptcies (WorldCom/Enron) LTCM / Russian Debt Crisis Current Yield Sub Prime and bankruptcies of major financial firms (e.g. Lehman) Historical Volatility Time Source: Barclays, BNP Paribas Investment Partners

15. Sukuk - A New Asset Class • Negative credit trend appears to be reversing DP World Sukuk – Moody’s Rating Road Map? Moody’s Rating from Jun-2007 Asia Rating Transition Post Asia Financial Crisis Pre Nov-09: A1 rating not affected by the 2007/09 sub prime crisis and and Lehman bankruptcy 25-Nov-09: Dubai World Restructuring announcement ? Nov-09: Downgraded multi notches from A1 to Baa2 Apr-11: Upgraded back to investment grade to Baa3 High Yield Dec-09: Downgraded further to Ba1 Mar-11: Dubai World Restructuring completed Sharp multiple notch downgrade during the Asian financial crisis Long term consistent recovery of average rating over time Sukuk market may be at the start of a gradual rating recovery phase. Source: Moody’s, S&P , BNP Paribas Investment Partners

16. Sukuk - A New Asset Class • Achieves Sharia Compliance, but not exclusive to Muslim investors • Anchors the development of the Islamic capital markets • Majority of issues are US dollar denominated securities, a strong factor in improving liquidity • Currently it provides exposure to fast growing regions – the GCC and Asia • Enhances portfolio diversification • Robust returns expected over 1 or 2 years even if Treasury rates were to rise sharply • Expected decline in volatility should increase probability of positive returns • Solid market technical positioning • Positive credit rating momentum is returning • Summary

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