GCC

Dubai Islamic Economy Development Centre Reviews Developments of Strategic Initiatives

The Dubai Islamic Economy Development Centre (DIEDC) recently held its third virtual board meeting of 2020. Dubai has successfully positioned itself as a prestigious regional centre that offers significant opportunities to traders and investors. DIEDC’s board discussed the GIES Virtual Series that is organised in collaboration with the Centre’s strategic partners, to prepare for the upcoming Global Islamic Economy Summit in 2021. With four webinars already held to date, the virtual series is set to continue until end-2020. With the participation of leading local, regional and international industry experts, the virtual webinars have highlighted many topics of interest to Islamic economy stakeholders.

Emirates Islamic's $500m #sukuk issue draws in a substantial $1.2b

Emirates Islamic has closed a $500 million five-year sukuk forming part of its $2.5 billion 'Certificate Issuance Programme'. The issue, rated A+ by Fitch, will be listed on Nasdaq Dubai and Euronext Dublin. Bank ABC, Citigroup, Dubai Islamic Bank, Emirates NBD Capital, HSBC, Standard Chartered Bank and The Islamic Corporation for the Development of the Private Sector acted as joint lead managers and bookrunners. Investors showed strong appetite, ensuring an order book of $1.2 billion and nearly 2.4 times the issuance size with a profit rate of 1.827 per cent. This is the lowest achieved by a UAE bank in the past 10 years.

Saudi Re receives Sharia certification from Shariyah Review Bureau

Saudi Reinsurance Company (Saudi Re) announced receiving the Sharia certificate for its offerings from Shariyah Review Bureau (SRB). With a solid financial base of total assets SAR 2.9 billion and an A3 rating by Moody's, Saudi Re is eyeing opportunities to strengthen its presence in its target markets in the Kingdom, the Middle East, Asia and Africa. CEO Fahad Al-Hesni said that Saudi Re has identified Environmental, Social and Governance (ESG) objectives from investors perspective, among which Sharia compliance was emphasized as a key factor in reflecting the responsible conduct. SRB apply various Sharia supervisory actions like reviews, investment screening, interactive consultations, Sharia Board administration and periodic Sharia audits.

Saudi German Hospital secures $81.33mln loan from Al Rajhi Bank

The Middle East Healthcare Company (Saudi German Hospital) received Sharia-compliant credit facilities worth SAR 305 million from Al Rajhi Bank. A total of SAR 120 million of the financing is revolving loans that will be renewed periodically, while the remaining sum of SAR 185 million will be paid within six years. The first amount is short-term financing that aims to cover working capital needs whilst the second sum is a medium-term loan that will be used in financing the healthcare provider's digital transformation. The loan is guaranteed by a promissory note.

Demand for green Islamic bonds gain momentum in GCC states

Investor appetite for green sukuk is growing in the Arabian Gulf countries despite the lukewarm economic growth amidst the ongoing pandemic. Saudi Arabia’s electric transmission monopoly, Saudi Electricity Company (SEC), issued a multi-tranche $1.3 billion green sukuk and reported an order book of more $5.2 billion, indicating the immense appetite for sustainable Islamic bonds. The proceeds of SEC’s sukuk will be used to finance green projects relating to energy efficiency and renewable energy. Currently, Saudi Arabia is almost exclusively reliant on fossil fuels for power generation and has a high energy usage per capita because of its reliance on air conditioning and desalinated water. The green sukuk market is still in its infancy, with only a handful of issuances taking place.

Emirates Islamic Bank hires banks for 5-year dollar #sukuk - document

Emirates Islamic Bank has hired banks to arrange the issuance of U.S. dollar-denominated five-year sukuk.
It hired Emirates NBD Capital, HSBC, The Islamic Corporation for the Development of the Private Sector, and Standard Chartered to arrange investor calls that started on Monday.

Oman plans to launch third issue of sovereign #sukuk issue

Oman's Ministry of Finance announced to launch of the third issue of sovereign sukuk denominated in Omani rials within the framework of the sovereign sukuk programme launched in 2019. The ministry has appointed Bank Muscat and its Islamic window (Meethaq) to manage the bond issuance and it can be subscribed through all licensed banks operating in the Sultanate. Oman is currently facing financial challenges as a result of the decline in oil prices and the consequences of COVID-19 pandemic, which have directly contributed to the sharp decline in global oil prices since the beginning of this year.

ADIB partners with Ministry of Finance to offer NextGen eDirham cards

Abu Dhabi Islamic Bank (ADIB) has partnered with the UAE’s Ministry of Finance (MoF) to offer the new range of eDirham cards. eDirham cards offer a smart payment method accepted by more than 5,000 government services in ministries, federal and local authorities. The system offers many advantages, including low costs and the possibility of paying service fees through different payment channels, which include eDirham apps for phones, e-wallet, vouchers, and self-service eKiosks. The ADIB eDirham Gold and ADIB eDirham Signature cards represent the third generation of the eDirham cashless payment service.

KFH–Bahrain launches a first-of-its-kind Islamic Securitization Program

KFH-Bahrain launched a first-of-its-kind Shari'a compliant Securitization Program which offers a series of Mudaraba Sukuk under a trust structure. Under the program, sukuk will be issued against a select pool of financing portfolios, where the sukuk holders become the ultimate beneficiaries of the financing portfolio. The program can also be used for non-KFH-Bahrain financing portfolios, where the Bank acts as an arranger. Mr. Rashid Alkhan, Head of Wealth Management says the program provides an opportunity for clients to diversify their portfolio allocation strategy. The program will increase market activity and financial institution's ability to finance housing units in the Kingdom of Bahrain.

Dubai lifts veil on debt, showing it owes much less than thought

Dubai made a rare foray into public bond markets, revealing that its debt burden is now a lot smaller than estimated by analysts only months ago. The emirate’s outstanding direct debt stood at 123.5 billion dirhams ($33.6 billion) as of June 30. That’s about 28% of last year’s gross domestic product. Dubai's economy is heavily dependent on tourism, trade and retail, sectors hardest hit by the emergency. The global pandemic forced Dubai to delay this year’s World Expo. The government revised this year’s budget revenue to 44.2 billion dirhams down more than 30% from what it originally envisaged. It also decreased its projected expenditure to 56.2 billion dirhams for 2020, leaving a deficit of 11.9 billion dirhams. Dubai owes a total of $20 billion to the Abu Dhabi government and the UAE central bank, an amount it used to support strategic entities that required financial assistance.

Sustainability and Islamic Finance in the United Arab Emirates

The targets set by the UAE to prepare the country’s economy for a post-hydrocarbon era have been very ambitious. As part of its economic diversification actions, the UAE has undertaken to increase the clean energy contribution to the total energy mix from 0.2% in 2014, to 24% by 2021. In the UAE Energy Strategy 2050, a target is set of cutting carbon dioxide emissions by 70% by 2050 and increasing the use of clean energy to meet 50% of the country’s energy needs by the same year. The Dubai Clean Energy Strategy 2050 similarly sets out the emirate’s aim of transforming Dubai into a global clean energy centre. These goals will require considerable capital investment. However, while other centres for Islamic finance have seen a growing number of responsible finance sukuk issuances, there have been noticeably fewer issuances in the UAE. Mobilising private sector finance through responsible financing activities will be critical in helping the UAE government to meet its extensive sustainability targets.

Dubai to come back to debt market with 10-year #sukuk, 30-year bonds

Dubai has hired banks to arrange investor calls ahead of a potential sale of U.S. dollar-denominated 10-year sukuk and 30-year conventional bonds. Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, and Standard Chartered are mandated to arrange the calls. The benchmark issuance is part of a $6 billion sukuk issuance programme and of a $5 billion bond issuance programme. The new issuance could bolster the finances of the Middle East trade, finance and tourism hub, which has been hit hard by the coronavirus crisis this year.

#Qatar- Masraf Al Rayan's $750mn #sukuk generates overwhelming demand from global investors

Masraf Al Rayan has announced the issuance of $750mn Sukuk with a term of five years under the bank's existing $2bn sukuk programme. The issuance was 4.4 times oversubscribed to the tune of nearly $3.3bn. The overwhelming demand from investors has allowed the bank to increase the issue size from an initial $500mn to $750mn. The issuance was priced at a spread of 185 basis points over the five-year mid swap carrying a fixed profit rate of 2.21% per annum. Al Rayan Investment, Crédit Agricole CIB, HSBC, Mizuho, MUFG, QNB Capital, Société Générale and Standard Chartered Bank acted as joint lead managers and bookrunners on this transaction.

Registration deadline for Ma’an third Social Incubator extended to 12th September

The Authority of Social Contribution, Ma’an, is urging all social entrepreneurs in the UAE and wider MENA region to complete the online application, as the Authority announces an extension for registrations until 12th September. The teams shortlisted for the Social Incubator programme will aim to strengthen the interactions and create stronger emotional bonding between parents, children, relatives, the elderly and couples across the Emirate and highlight the importance of family values. Ma’an will shortlist and support 10 winning social start-ups, who will then undergo a 90 day training programme and develop their ideas into business ventures. Ma’an will invest more than AED 2 million in total in this cycle with the successful applicants also having access to milestone-based funding, mentorship, office space, business expertise and investors.

Arcapita and Mumtalakat Sell Stakes in NAS Neuron Health Services

Arcapita Group and Bahrain Mumtalakat Holding sold their ownership stake in Abu Dhabi-based NAS Neuron Health Services. The two companies partnered to acquire an equity stake in NAS United Healthcare Services in 2017. Umair Nizami is the Managing Director of Neuron, as well as CEO of Dubai Wing. NAS Neuron is one of the largest private TPAs of medical claims in the GCC region.

#UAE's first ETF tracking Sharia-compliant index lists on UAE markets

The UAE's first exchange traded fund tracking a Sharia-compliant index began trading on the Abu Dhabi Securities Exchange and the Dubai Financial Market. Bourses in the the region are ramping up efforts to diversify their product offerings to attract more foreign direct investment. Chimera Capital listed its Chimera S&P UAE Shariah ETF, which is designed to replicate the S&P UAE Domestic Shariah Liquid 35/20 Capped Index. The Chimera S&P UAE Shariah ETF is structured and built by S&P and monitored by a Shariah board that meets regularly to review and re-balance the index quarterly. Currently the index has ten securities across the two UAE markets. The fund has a total market capitalisation of Dh234 billion and assets under management of Dh934,839.

DIB Tier 1 Sukuk (3) Ltd. -- Moody's announces completion of a periodic review of ratings of Dubai Islamic Bank PJSC

Moody's Investors Service (Moody's) has completed a periodic review of the ratings of Dubai Islamic Bank (DIB).
Dubai Islamic Bank's A3 long-term Issuer ratings are derived from the bank's ba2 standalone baseline credit assessment and a five notch systemic support uplift based on Moody's view of a very high likelihood of government support from United Arab Emirates (rated Aa2), in case of need. DIB's ba2 BCA reflects the bank's solid profitability, deposit-funded balance sheet, and healthy liquidity reserves. These strengths are moderated by Moody's expectation of downside pressure on the bank's solvency in the 12-18 months on the back of lower oil prices, reduced investor confidence and the coronavirus-induced disruption.

College of Islamic Studies at HBKU and Qatar FinTech Hub Sign MoU

The College of Islamic Studies (CIS) at Hamad Bin Khalifa University (HBKU) has signed a Memorandum of Understanding (MoU) with Qatar FinTech Hub (QFTH). Through the agreement, CIS and QFTH will engage and contribute actively to the development of the financial technology (FinTech) industry in Qatar. QFTH represents a range of stakeholders in the industry from early-stage firms to large financial services companies and relevant service providers, who stand to benefit from CIS' insights and research. The Fintech Hackathon, which was launched in June 2020, is one of the pioneering areas of collaboration between CIS and QFTH.

Mideast family businesses should focus on succession planning, wealth transfer

The desire for wealth transition means that many family businesses may have to change their approach and look outside the family to increase that longevity rather than simply relying on the next generation inheriting the family business. It may be that the skill set or appetite of the next generation to take on the family business is simply not there. Furthermore, the inheritance laws governing the transfer of assets locally may vary from those applicable to assets located abroad. Wealth planning company Julius Baer expects to see an increase in the number of Dubai International Financial Centre (DIFC)/Abu Dhabi Global Market (ADGM) Foundations to support wealth and succession planning for clients in the UAE.

Moody's - Decline in #sukuk issuance to be limited by GCC financing needs

Moody’s expects sukuk issuance to modestly decline by 5% this year to about $170 billion because of the coronavirus crisis. Despite the decline, 2020 will still see the second highest sukuk issuance total ever, following a 36% increase in 2019. Total issuance in the first six months of 2020 dropped to $77 billion, down 12% from the same period last year, as activity in Malaysia and Indonesia flagged. Issuance in southeast Asia dropped by 25%, while volumes in the Middle East rose 7%. Volumes are likely to rebound in the second half of 2020, as governments raise money to finance their responses to the coronavirus crisis.

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