IslamicFinance.de

This week saw a big surge of MENA bond and sukuk activity, with four dollar deals coming to market and two other issuers lining up roadshows. The wave breaks the recent regional lull and points to a further flurry in the coming weeks as borrowers try to seize a window before the Middle East summer kicks in.

Dar Al Arkan's $450m 5.75% five year sukuk bucked the recent trend by performing well in the secondary market after pricing on Tuesday. The paper traded up to 100.75 bid on Wednesday, having been priced at 99.47. And despite the general market sell-off on Thursday, the notes were still quoted at 100.25 by the close.

According to the International Monetary Fund, Bahrain must urgently cut spending or risk unsustainable public debt as its fiscal deficit widens and oil prices decline. The smallest Gulf crude producer needs gradual fiscal consolidation equal to 7.7% of economic output over the next six budget years to contain its government debt at 40% of gross domestic product. IMF also recommended that Bahrain pare its fiscal stimulus to 0.9 percentage points of non-oil GDP from 2.1 percentage points. Bahrain’s outstanding debt including interest is about US$11.8 billion, with more than US$3 billion due this year. Moreover, investment in Bahrain’s private sector remains low, which may translate to non-oil growth of less than 4% in 2013. Bahrain is also vulnerable to oil price fluctuations.

Dubai Islamic Bank Group (DIB) today announced that its Long Term Issuer ratings have been affirmed by Moody’s at Baa1 and the outlook has been moved to “Stable”. The confirmation of DIB’s ratings reflects the recent capital injection and the expectation that asset quality pressure will ease which, in turn, should support profitability, according to Moody's. Morover, the systemic importance of the bank to the banking sector and the government ownership of 34% were also cited as some of the factors for the decision. Moody’s also affirmed the long term issuer ratings of Tamweel, which is a subsidiary of the bank (86.5% owned by DIB) at Baa3 and with the recent move by DIB to take over the company, Tamweel’s outlook on ratings has been upgraded to “Positive.”

The Boston College Center for Corporate Citizenship and Ernst & Young LLP have released a report – Value of Sustainability Reporting – that offers insights on the benefits of sustainability reporting, assuring sustainability reports, and the risks of not reporting. In today's business environment, sustainability reporting is evolving into a core business practice for companies around the world. Companies have reported a variety of motivations, including transparency, competitive advantage, risk management and stakeholder pressure. Moreover, the survey found that more than two-thirds of respondents indicated to employ the Global Reporting Initiative (GRI) framework in the preparation of their reports. Data-related issues were identified as challenges in the reporting process. The Value of Sustainability Reporting is based on the findings of a comprehensive survey of 579 corporate professionals familiar with their companies’ sustainability disclosures.

Qatar resident Ziyad Rahim, head of market risk at Barwa Bank, recently broke a Guinness World Record by completing the Marathon Grand Slam in just 41 days. In the process, he set the fastest time to complete a marathon on each continent and the North Pole and smashed the previous record of 324 days, which had stood for over six years. He is also the first person in the world to complete two extreme marathons - at Antarctica (-20 degrees Celsius) and the Sahara Desert (50 degrees Celsius) - within a month. Ziyad is an ambassador for CARE, a charity educating underprivileged children in Pakistan. He says he runs to promote health and fitness and raise awareness for the less fortunate.

BMI Bank , the Bahrain based associate of Bank Muscat , has announced that they have agreed in principle in favour of a merger with Al Salam Bank, an Islamic Bank incorporated in Bahrain. The completion of the transaction, including final share-swap ratio, is subject to satisfactory due-diligence as well as regulatory and shareholder approvals, Bank Muscat said in posting on the website of the Muscat Securities Market. Bank Muscat has a shareholding of 49 per cent in BMI bank.

Syarikat Takaful Malaysia Bhd will offer an additional 15 per cent no claim rebate to all its participants in the general and selected family takaful products. Moreover, the company will increase its value added service delivery amidst tougher competition. It was reported that Takaful Malaysia is confident of disbursing about RM35 million in no claim rebate this year to its customers given the positive growth in its General Takaful portfolio. Group managing director Datuk Mohamed Hassan Kamil said last year, Takaful Malaysia paid out a record RM31 million in no claim rebate to its customers, adding it is optimistic on capturing a more than 50 per cent market share from the current 40 per cent.

State pension funds in the Gulf are sharply increasing their investments in new assets on the back of the Arab Spring and demographic shifts, according to Invesco’s Middle East Asset Management Study. Regional state pension funds were forecast to grow assets by 19 percent this year. Morover, the study said that about 15 percent of all new sovereign assets in the region were going into state pension funds. In contrast, Gulf sovereign wealth funds (SWFs) are expected to increase assets by an average of just 4 percent, down from 8 percent in 2012. Invesco said that the political unrest in the region had caused governments to pour more cash into pension funds as well as so-called ‘development’ SWFs, which focus their investments on assets that contribute to local economic growth.

The Turkish government has announced it will be seeking to tap into the $1 trillion Islamic financial industry. Stronger Islamic banks would enable Turkey to attract more cash from the Gulf and Asia, where the appetite for Sharia-compliant products far outstrips the existing supply. This could potentially make Istanbul a regional financial hub. For now, Europe still accounts for the lion's share of trade with Turkey's financial institutions and wider economy. But with Europe still in the grip of financial woes, the Turkish economy is diversifying and looking at alternative markets in the Middle East or North Africa. The development of Islamic finance could become an increasingly useful instrument in that strategy.

Stuart Crocker, global head of private banking and wealth management at Abu Dhabi Islamic Bank and Merrill Lynch veteran, has left the bank. Regional private banks were supposed to be making a challenge to the dominance of big international players and Crocker was one of the landmark hires to bolster the case for the local Banks. Crocker joined Abu Dhabi Islamic Bank (ADIB) in May 2011 as global head of private banking and wealth management. Apparently, there is no replacement lined up and Crocker's exit comes amid a change of strategy at the bank. ADIB didn't respond to requests for comment.

Crowell & Moring's Cairo office has advised the Abu Dhabi Islamic Bank-Egypt in connection with an Islamic finance facility extended to Maridive and Oil Services SAE. Abu Dhabi Islamic Bank- Egypt was the Initial Mandated Lead Arranger and the global coordinator in the deal, coordinating the financing with several Banks. The deal is the first Islamic Ijara structure syndication to take place in the Egyptian market, valued at $150 million. As legal counsel to the initial mandated lead arranger, Crowell & Moring advised the facility providers (the banks) on the structuring and documentation of the transaction.

Guidance Investments (GI) has launched a RM150 million Shariah-compliant investment fund for equipment leasing for the Saudi Arabian market in partnership with Lembaga Tabung Haji (TH). This Tabung Haji acted as the capital provider, while the US-based ATEL Capital Group, the equipment leasing company is to provide the machineries for the Saudi market. TH CIO Abd Kadir Sahlan said that his company has committed a total of RM150 million in the private equity fund in support of ATEL in this venture. The funds will be disbursed in phases over the next two to three years, depending on the deployment of the portfolio in the Saudi market. At the same time, Guidance Investments has formally launched its operations in Malaysia with the opening of its headquarters in Kuala Lumpur.

The State Bank of Pakistan (SBP) has issued a circular to all Islamic banking institutions about the Islamic Export Refinance Scheme (IERS) and eligibility of Ijara Sukuk, Islamic bonds to be included in the Musharaka pool. Every Islamic bank is obligated to create a Musharaka pool consisting of financing blue chip companies on Islamic modes. The Musharaka pool is supposed to have a minimum of ten companies with diversified lines of businesses to avoid concentration in sectors. The circular listed the conditions that will make the Government of Pakistan Ijara Sukuk eligible to be included in the pool, created under the IERS. The Islamic banking institutions are also required to maintain records of Sukuk issues and the amount it allocated to its respective Musharaka pool.

State Bank of Pakistan (SBP) has notified that now un-encumbered Government of Pakistan Ijara Sukuk may be included in the Musharaka Pool (MP), created under the Islamic Export Refinance Scheme (IERS). This inclusion will be subject to the several conditions. All Islamic Banking Institutions (IBIs) shall report Sukuk in MP under the sector heading of GoP Ijara Sukuk. IBIs shall maintain record of Sukuk issue included and the amount of that issue will be incorporated in the MP. The banks are advised to refer to SBP’s Islamic Export Refinance Scheme and other instructions issued from time to time. Other instructions on the subject remain unchanged,

A new bank is set to be inaugurated in the Gaza Strip next week, although it has not yet received the necessary licence from the Ramallah-based Palestinian Monetary Authority (PMA). The Al-Intaj bank has a capital of $20m and a board of directors chaired by Kuwaiti businessman and member of the International Islamic Fiqh Academy, Dr Riyadh Al-Khulaifi. The bank... will be headquartered in Gaza City and have branches in other parts of Gaza Strip in the coming years. 50% of its capital will be channelled to production-oriented activities, while 40% will be allocated to the traditional transactions. The remaining 10% will be set aside to the 'murabahat' (Shari'ah-compliant transactions), the lender's deputy board chairman Rushdi Wadi said.

The Board of Governors of the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), member of Islamic Development Bank (IDB) Group, approved in its 20th Annual Meeting the Annual Report and the Financial Results for 1433H (2012). Last year, the Corporation has continued to enhance the support it provides for exports from and investments into our Member Countries. Despite the existing challenges, the Corporation's Business Insured numbers remained strong at USD 3.07 billion, which is comparable to the business insured numbers achieved last year. ICIEC Chief Operating Officer Khemais El-Gazzeh said, especially the Political Risk Insurance (PRI) program stood out, having increased by 167% to reach a record high of USD 825 million.

The opposition Syrian National Coalition has received a last-minute invitation to Wednesday’s Friends of Syria meeting in Amman, which acting chief George Sabra will attend. The meeting is expected to focus on efforts spearheaded by the United States and Russia to organise a peace conference in Geneva next month. In the same time, Islamic Development Bank has temporarily suspended Syria’s membership, according to IDB President Ahmad Mohamed Ali Al Madani. Mr. Madani said the decision was taken by the bank’s Board of Governors, citing a Syria resolution by the Organisation of Islamic Cooperation that was discussed at the board’s recent meeting. He added the IDB was set to give Syrian refugees any kind of help, but stressed its humanitarian funds were strictly limited.

The Islamic Development Bank's Board of Governors (BoG) has approved to more than triple the Bank's authorized capital to 100 billion Islamic Dinars (about US$150 billion) from 30 billion. The BoG also increased the Bank's subscribed capital from 18 billion to 50 billion Islamic Dinars. The capital increase reflects the Bank's strong balance sheet and the growing economic development needs of its 56 member countries. The Bank also announced it will immediately tap the public market with a US$1 billion offering of sukuk. The five-year offering is rated Triple A by each of the three major bond rating agencies (Standard & Poor's, Moody's and Fitch), and will be dually listed on the London Stock Exchange and Bursa Malaysia. The Bank has been designated as a Zero Risk Weighted Multilateral Development Bank by the Basel Committee on Banking Supervision and the Commission of the European Communities.

Kenya's only Shariah-compliant insurer Takaful Insurance of Africa Ltd (TIA) plans to expand its operations into five East African nations, according to its Chief Executive Officer Hassan Bashir. Under TIA’s five-year plan it will expand into Ethiopia, Tanzania, Uganda, Somalia and the autonomously governed enclave of Somaliland, where it was granted a license this year. CIC Insurance Group (CIC) is one of the largest investors in TIA with about 22 percent, while four investment companies also have stakes. In Kenya, TIA has four outlets and 80 agents in Nairobi and Mombasa. The company plans to add at least two more outlets this year and double the number of agents, Bashir said.