IslamicFinance.de

Repayment of a $4.1 billion (around Dh15.05 billion) bond issued by Nakheel was set to be completed yesterday, when other Islamic bond issuers reassured investors about their repayment capability in replies to a ‘soundness and health' check by Nasdaq Dubai.

Dow Jones Indexes, a leading global index provider, on December 16 announced that it has been named “Best Index Provider Shari’ah compliant Indexes” by Dubai-based Islamic Business & Finance magazine.

The government of Abu Dhabi and the Central Bank of the UAE has announced that it has agreed to provide $10 billion to the Dubai Financial Support Fund.

The Dubai Financial Support Fund can therefore enable Nakheel to pay its Sukuk due today.

Nakheel Development Limited announced via the exchange, Nasdaq Dubai that it aims to repay the Sukuk in the next two weeks. According to the statement it will use funds that will be provided by the Dubai Financial Support Fund.

Westlaw Business, part of Thomson Reuters, and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) today announced their agreement to provide current standards and other Islamic finance industry information for global business law professionals within the Westlaw Business Islamic Finance Centre. Please check the full news at the link provided.

Dubai Islamic Bank (DIB) announced today the launch of Wajaha, a distinguished wealth management service for ultra high net worth individuals. Tailored to meet the distinct needs of the ultra high net worth clients, Wajaha is an invitation-only service that offers unparalleled advantages, from unique financial products to personal relationship managers, offered within a private setting in exclusive Wajaha Centres in Abu Dhabi, Dubai and Sharjah.

HE Maqbool Ali Sultan, Minister of Commerce and Industry, Chairman of the Board of Directors of the Capital Market Authority chaired on Saturday the fourth and last meeting of the Board for 2009, which approved a number of proposed amendments to the Capital Market Law including a new clause on the creation of arbitration centre pertaining to the laws under the jurisdiction of CMA

The full news is available at the link provided.

Gatehouse Bank will launch a Shari’ah-compliant Structured Trade Finance Fund in early 2010. Parnter is the wholesale Islamic market intermediary company DDCAP. The aim of the fund is to invest capital in structured trade finance transactions.

THE Ministry of Finance issued $68 million worth of sukuk in two separate floats between November and December, bringing the total sold to more than $2 billion. The Ministry of Finance had completed the successful pricing of its 40th and 41st issuances of short-term Sukuk Al-Ijarah securities.

Full news of the about the issuance of the sukuk is available at the link given below.

The question was analysed by Mr John Foster of BBC where it was concluded that anything that is not prohibited under the Al-Quran and the As-Sunnah is permissible. The full news is available at the source stated below.

The UK Government has committed to create a level playing field on VAT for retail investors in Islamic finance products. In his Pre-Budget Report statement, the Chancellor, Alistair Darling, says he will also provide relief from tax on capital gains for alternative property refinance transactions to maintain the UK's position as a centre for Islamic finance.

In addition, guidance will be issued on VAT treatment of alternative finance investment bonds.

Australia's wealth of natural resources and financial landscape provide a natural platform for Islamic finance, with potential to attract a new type of global investors. Trailing Muslim neighbours such as Malaysia and Indonesia, Australia is looking at developing Islamic finance to attract wealth and create jobs.

The Australian and Malaysian governments held talks this week to cooperate in Islamic finance. The Australian government has expressed interest in Islamic finance but so far it is limited to small entities such as the Muslim Community Cooperative (Australia) Ltd and Iskan Finance which offer home loans. One of the biggest obstacles to the development of Australia's Islamic finance market is tax law.

Robin Wigglesworth reported in the Financial Times that although, the Islamic finance industry may have breached the USD 1,000 billion mark in assets, difficulties arise, in spite of claims that the industry’s model is inherently more robust than conventional finance.

Islamic financial institutions have proven equally susceptible to a global economic downturn and property correction as their larger conventional peers. Dubai has been an active issuer of Islamic bonds, known as sukuk, and the exposure of Islamic banks to the emirate’s debt pile has caused the cost of financing to rise greatly during the past two weeks and triggered a rash of credit agency downgrades

The Zawya Collaborative Sukuk Report covers the following issues:

• What is the distribution of current and potential investors and what is their appetite?

• What is the appetite of the Supply side and what drives their need to issue?

• What are the challenges faced by the industry, what are the associated developments and what needs to be done to resolve them?

The download is free after providing contact details to Zawya:

Funds at Work, the strategy consultants analysed the Social Responsible Investment industry with their network analysis. Previously the firm did analyse the Sharia Scholars and their board positions. The report regarding the sister industry of Islamic finance can be downloaded for free.

The Financial Times produced a special looking into the Future of Islamic Finance.

The download is free of charge.

Dear Readers,

An article in the Financial Times, has discussed the legal issues surrounding to an eventual Event of Default of the Nakheel Sukuk, which can be read here:

http://www.ft.com/cms/s/0/215c0502-e038-11de-8494-00144feab49a.html

Some comments came afterwards referring to that piece, e.g. on FT Alphaville:

http://ftalphaville.ft.com/blog/2009/12/04/86736/nakheel-and-the-sukuk-l...

Claiming that because of Sharia law in the UAE there is uncertainty regarding burden sharing.

Such a claim is an error. While the Sukuk was structured to comply with Sharia the various Agreements are either governed by English law or UAE law.

Therefore it is crucial to see how assets could be seized under UAE law not under Sharia law: A nice summary of the dispute resolution in the UAE is free for download by the law firm Afridi and Angell:

http://www.legal500.com/assets/images/stories/firmdevs/disputeresolution...

Press Release

Several Dubai Government-Related Entities Downgraded And On Watch Negative Following
Debt Restructuring Announcement

DUBAI (Standard & Poor's) Nov. 25, 2009--Standard & Poor's Ratings Services said it
had taken rating actions on a number of Dubai-based government related entities
(GREs) and transactions (for full details see "Ratings List" below). Standard &
Poor's has downgraded DIFC Investments LLC, DP World Ltd., Jebel Ali Free Zone
(FZE), Dubai Holding Commercial Operations Group LLC (DHCOG), and Emaar Properties
PJSC. All of these entities have been placed on CreditWatch with negative
implications. The ratings on Dubai Multi Commodities Centre Authority (DMCC) were
affirmed, although they were placed on CreditWatch negative. A CreditWatch negative
placement also applies to the notes issued by Thor Asset Purchase (Cayman) Ltd.
(Thor), which are securitized by cash flows from a revolving pool of existing and
future receivables originated by Dubai Electricity and Water Authority (DEWA; not
rated).

The rating actions are the result of the announcement on Nov. 25 of the

Dubai World, a conglomerate owned by the government of Dubai, is asking its creditors for a six-month “standstill” on its obligations. Dubai World includes Nakheel, which has USD 4 bn in outstanding Islamic debt falling due next month.

The Central Council of Muslims in Germany presented on the BAFIN Islamic Finance conference how mortgages for the Muslim community could look like, how large the market is and challenged the perception that there would be a need to change laws to avoid double real estate transfer tax; it shall rather work tax efficient with proper structuring and without changes. Hence, financial institutions are asked to provide equity and debt based mortgages for the Muslim market.