Global sales of Sharia-compliant debt have slumped more than 70 per cent this year amid a plunge in crude prices. The drought underscores the industry’s dependence on sales from the GCC. Activity will pick up over the coming weeks, with Emirates Airline planning to sell US$1 billion of Sharia-compliant notes this quarter. Petroliam Nasional, the Malaysian state oil company known as Petronas, is seeking to raise as much as $7bn in the largest sale of dollar-denominated sukuk. The Islamic Development Bank will meet investors from this week before a possible issue. Meanwhile, Garuda Indonesia may issue $500 million of US currency Sharia-compliant debt in April.
The Thomson Reuters Global Sukuk Index is at 117.49811 points, up from 117.48601 at the end of January and 115.79726 at the end of last year. The Thomson Reuters Investment Grade Sukuk Index is at 115.48693 against 115.34912 at the end of January and 113.69014 at end-2014. Some of the sukuk in the pipeline are: Kuveyt Turk is seeking a window to sell maiden ringgit-denominated sukuk in Malaysia; the lender will set up a 2 billion ringgit ($549 million) Islamic medium-term note programme. National airline Garuda Indonesia said in late February it had taken a $400 million bridge loan from National Bank of Abu Dhabi and Dubai Islamic Bank and would refinance it with a $500 million sukuk issue later this year. Khazanah Nasional plans to issue sukuk worth up to 1 billion ringgit to help fund schools.
Malaysia's $40 billion sovereign wealth fund Khazanah Nasional plans to issue a sukuk worth up to one billion ringgit ($279.17 million) to help fund schools, its managing director Azman Mokhtar said. The planned "social impact sukuk" is awaiting regulatory approval from Malaysian financial regulators. The move is aimed at opening funding for education to a broad pool of investors rather than financing it out of its own reserves, he added. Mokhtar said a lot of charitable organisations, family offices and trusts wanted to participate in the fundraising and this had helped prompt Khazanah into setting up the sukuk rather than using its own money.
Liquidity Management Centre (LMC) has announced 18 per cent increase in the net profit at $4.22 million for last year when compared with $3.57m for 2013. This resulted in a return on capital equivalent to approximately 8pc while the average one-year interbank rate remains below 0.75pc. Total operating income was $10.11m as against $10.57m for 2013. Net profit for the fourth quarter was $847,000 versus $784,000 for the same period in 2013. Portfolio-based activities saw a growth of approximately 13pc while the bank's balance-sheet continues to see significant improvement in terms of asset quality and liquidity. Shareholders' equity grew by 7.18pc from $62.96m as of 2013-end to $67.48m as of December-end last year.
Niger's government will establish an Islamic bond programme worth 150 billion CFA francs ($260 million), permitting its first issue of sukuk, with assistance from the private sector arm of the Islamic Development Bank. Niger's sukuk would be issued over the next five years in two separate transactions worth 75 billion CFA francs each, the Islamic Corporation for the Development of the Private Sector (ICD) said. The government already has a number of projects that could be financed through sukuk, Amadou Boubacar Cisse, Niger's planning minister, was quoted. Niger would follow Senegal and South Africa, which issued sovereign sukuk for the first time last year; Ivory Coast has been considering a 200 billion CFA franc sukuk issue. Tunisia plans a debut sukuk issue in the third quarter of this year.
Afriland First Bank, the Cameroonian banking institution, has set high fundraising and loan approval targets for its Islamic finance clientele. Indeed, according to Youssoufa Bouba, the bank’s Director of Specialised Finance, Afriland First Bank is aiming to achieve 3 billion FCFA in Islamic checking accounts. Bouba goes on to state that the bank intends to grant 2 billion FCFA in loans at the same branch. These goals depend not only on the size of the Muslim population in Cameroon (the institution’s target market), which represents 20% of the population there, but also on the products the bank implements with private sector support provided by the Society for International Development (SID).
European Islamic Investment Bank PLC Wednesday said it has appointed Neil McDougall as its interim finance director. According to the company, McDougall is a qualified accountant who has held senior board and management positions at financial institutions including Europe Arab Bank and Commerzbank. The company has continued the search for a finance director after the appointment of Michael Warren Kidd, the chief operating officer of its majority-owned Rasmala Investment Bank and head of Strategy and Principal Investment at EIIB, fell through back in July of 2014. European Islamic Investment Bank shares were down 3.9% at 161.00 pence on Wednesday.
London has set its sights on becoming the world centre for the Islamic finance industry according to the UK's foreign office minister for Middle East, Tobias Ellwood. Britain was also committed to promoting a "peaceful and prosperous" Middle East and expanding trade ties with the region, which topped £35bn last year, said Mr Ellwood. Mr Ellwood also celebrated notable sharia-compliant investments that have been used to fund some of the capital’s largest developments, including The Shard and the Olympic Village. The sovereign Sukuk market, which makes up only 0.1pc of global financial assets, is predicted to expand by 20pc a year.
Gulf Finance House (GFH), the Bahraini Islamic investment firm, plans to make a $230 million sukuk issue this year to help it fund acquisitions of two to three regional companies. The bank sold $170 million of convertible sukuk murabaha last year to raise money for the investments, Ahmed Khalil Al-Mutawa said. The paper was converted into equity in the same year. In addition to the funds raised through sukuk last year and this year, the rest of the money needed for the acquisitions is likely to come from bank borrowing. Al-Mutawa said that the companies targeted by GFH focused on asset and wealth management and were based in Saudi Arabia, Bahrain and Dubai. The deals, which involve taking controlling stakes, should be closed by the end of the second quarter, he said. He did not give further details.
The International Islamic Liquidity Management (IILM) has successfully reissued USD990 million benchmark size short-term Sukuk. i) A USD490 million 3-month tenor priced at 0.56260% profit rate, which received total bids of $1.1 1 billion from 11 bids. ii) A USD500 million 6-month tenor priced at 0.78570% profit rate, which received total bids of just over $1 billion from 14 bids. The reissuance of USD990 million Sukuk auction was fully subscribed by IILM primary dealers. After a quiet start to 2015, Sukuk market activity picked up this week a short-term issuance by the Bahrain Central Bank and with announcements of upcoming issuances from Gulf Finance House, Qatar Islamic Bank, Indonesian national air carrier Garuda Indonesia, and the Islamic Development Bank.
Turkey's Doga Group plans to enter the takaful market in the coming months with what would be the country's first such product. Its Doga Sigorta insurance unit is close to signing a cooperation deal with reassurance companies such as Swiss Re and others from the Gulf and Malaysia, the unit's Chairman Nihat Kirmizi said. Kirmizi said the Doga Group wanted to take advantage of the growing interest for Islamic finance products in the largely Muslim nation. The firm will be completely ready by May, and has received verbal permits from the Treasury. He added that at least three to four other firms planned to enter the takaful insurance market by 2018.
Islamic International Rating Agency (IIRA) has reaffirmed its Shari'a Quality Rating of AA (SQR) assigned to Jordan Islamic Bank ( JIB ). This rating indicates JIB 's conformance to very high standards of Shari'a compliance in all aspects of Shari'a quality analysis. The bank is supervised by an eminent Shari'a Supervisory Board, which comprises both Jordanian residents for ease of access, and those present on the group's Unified SSB, for international reach. The SSB regularly reviews activities of the bank to ensure Shari'a compliance. Transparency of financial reporting vis-à-vis investment accounts and corporate governance disclosures are mainly in line with the recommended best practices by IFSB.
As uncertainties over the management of the Islamic lender Bank Asya continue, auditors from the Banking Regulation and Supervision Agency (BDDK) who are uneasy about a possible penalty that they may be subject to, have warned the agency, since the takeover decision was not made at a general assembly meeting of the bank. A news report in Bugün daily on Monday said the BDDK's auditors are worried about a possible fine for the takeover decision and had called on the agency's top officials to convene a Bank Asya general assembly meeting. The report further claims that the auditors expect a penalty of around TL 8-10 billion for the failure to gain a general assembly decision in the handing over of the management of the bank.
Maybank Islamic has launched its Shariah Centre of Excellence (SCOE), which focuses on research and education, talent development, thought leadership and community welfare. Its chief executive officer Muzaffar Hisham said the center was a virtual centre, which aimed to be a repository of Shariah knowledge and reference point on best practices for industry players, academic fraternities and the general public. The bank has collaborated with INCEIF, the Global University of Islamic Finance, including sponsoring the university’s auditorium and post-graduate students. Maybank Islamic has also rolled out other programmes under the SCOE initiative, including a public lecture series as well as Islamic finance publications.
Warba Bank has announced that it successfully arranged $150 million Shariah-compliant one - year receivable backed syndicated financing facility for the International Bank of Azerbaijan. The Bank reported that it participated with a stake of $20 million in this transaction along with J.P. Morgan Bank, Citigroup, Barwa Bank, Al Hilal Bank, Noor Bank and Dubai Islamic Bank. he IBA concluded last year with $526 million sharia compliant assets compared to the Islamic Banking assets at the level of $220 million at the beginning of 2014. Behnam Gurbanzade, Director of the Islamic Banking Department of the IBA, recently said that the Bank is planning to increase the amount of Islamic financing in Azerbaijan in 2015.
Greece’s new Syriza government has two major economic challenges to address: a Resolution of Greece’s unsustainable debt burden followed by a Transition to a long term sustainable economy. Greek finance minister Yanis Varoufakis' proposal is for a conversion of the existing dated ‘debt’ liabilities into a modern form of the undated credit instruments (‘stock’). Firstly, Greece would dedicate an agreed proportion of tax income to long term funding. Greece then issues stock at a discount, each of which is returnable in payment of Greece’s taxes. This new issuance would then be allocated between the different creditors in a way reflecting the repayment date and interest rate of Greek liabilities. From then on Greece would use part of its tax income to buy back this stock for cancellation.
Kuwait's Warba Bank has successfully arranged a US$150 million, Sharia-complaint syndicated finance facility for the International Bank of Azerbaijan ("IBA"). The facility has a tenor of one year with a bullet repayment due at maturity. Warba Bank has participated in this transaction with a stake of US$20 million in a consortium of six regional and international banks: J.P Morgan Bank, Citigroup, Barwa Bank, Al Hilal Bank, Noor Bank and Dubai Islamic Bank. In addition, Warba Bank has also announced its contribution of US$15 million in an Islamic Sharia-complaint facility amounting US$80 million arranged by HSBC for the Turkish Ozun Group. Moreover, the Bank sold its real estate investment in West Bromwich in the United Kingdom achieving net profit of KD 640 K.
The Central Bank of Nigeria (CBN) has finalised plans to opt for a centralised approach to regulate Islamic Banking in Nigeria. The CBN will set up an advisory body,known as the Financial Regulation Advisory Council of Experts, that will oversee the industry in Nigeria. The council will be tasked with ensuring all banking products that are designated as Islamic conform to sharia principles. The advisory body will comprise a minimum of five members who will serve renewable two-year terms, and are restricted from working for any other financial institution supervised by the central bank. Moreover, the Council will be guided by the principles of sharia governance issued by the Malaysia-based Islamic Financial Services Board.
L'Etat du Sénégal a été retenu par un jury composé de banquiers, de journalistes, de professeurs d’universités, de spécialistes de la Finance islamique, à l'issue d'une table ronde, mi-janvier 2015 à Kuala Lumpur, en Malaisie. La réunion de janvier dernier en Malaisie vient de décerner un satisfecit à l'Etat du Sénégal. Après son émission obligataire islamique sur le marché international d'un montant de 100 milliards de f CFA (premier du genre au sud du Sahara), menée par la BIS (Banque islamique du Sénégal) et arrangée par Citibank Dubaï et ICD, la signature du portefeuille de l'Etat prend ainsi de la voilure auprès des investisseurs et prêteurs "halal".
Jeddah-based Islamic Development Bank (IDB) is set to meet fixed income investors starting Sunday ahead of a potential dollar-denominated sukuk transaction. The AAA-rated IDB has picked nine banks to arrange investor meetings in the Middle East and Asia, a benchmark offering will follow, subject to market conditions. CIMB, Dubai Islamic Bank, GIB Capital, HSBC, Natixis, NCB Capital, National Bank of Abu Dhabi, RHB Islamic Bank and Standard Chartered have been chosen to arrange the sukuk sale. IDB, which last issued $1.5 billion in five-year Islamic bonds in September, is looking to increase its issuance of sukuk, partly to raise its profile among international investors and to secure similar pricing levels to other development banks.