Sukuk

Sharjah Islamic Bank mandates banks for capital boosting #sukuk

United Arab Emirates’ Sharjah Islamic Bank has hired banks to arrange investor meetings ahead of an issuance of U.S. dollar-denominated sukuk. Citi, HSBC and Standard Chartered have been hired to coordinate the deal, and they are bookrunners along with Abu Dhabi Islamic Bank, Bank ABC, Deutsche Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, and KFH Capital. The planned sukuk deal will boost the bank’s Tier 1 core capital.

Dubai developer The First Group to issue $135mln #sukuk

Dubai-based real estate developer The First Group plans to issue $135 million in sukuk. The developer has appointed investment bank Shuaa Capital to arrange the planned transaction. The First Group specialises in hotel investments. It has completed 11 projects in the UAE to date and has seven hospitality developments under construction. This issuance is one of few debt issues in the pipeline in the Gulf region after business slowed sharply during the holy month of Ramadan, which ended last week.

#UAE's Sharjah Islamic Bank readies capital-boosting dollar #sukuk

Sharjah Islamic Bank is expected to issue U.S. dollar-denominated sukuk by the end of June to boost its Tier 1 core capital. The bank's board approved earlier this year the issuance of sharia-compliant Tier 1 instruments for up to 2.8 billion dirhams ($762 million). Last year, Sharjah Islamic raised $500 million in sukuk with HSBC and Standard Chartered as global coordinators, attracting around $950 million in orders. A few other Gulf issuers are also expected to tap the international debt markets over the coming weeks, taking advantage of cheaper funding costs after a drop in yields on the benchmark U.S. Treasury rates.

OPINION: #Sukuk bonds becoming increasingly mainstream

According to Dino Kronfol, CIO at Franklin Templeton Investments, the future is bright for investing in sukuk. He is confident that sukuk could provide the stability that mitigates an uncertain global economy, particularly as more risk management tools become increasingly integrated into sukuk products. Governments and financial institutions are the biggest sukuk issuers globally, so their role in terms of pushing for market growth and development will remain vital. Asia has seen the volume of sukuk issuances decline 4% on average over the past five years. Kronfol thinks this trend should reverse as issuances come from new sources and attract more investors. Already, the number of sukuk issuers is expanding: Nigeria, Pakistan, Hong Kong, Turkey and Indonesia have become more significant in recent years. One further possibility could be Chinese issuers looking to diversify their sources of funding.

KIB issues $300 million AT1 #sukuk

Kuwait International Bank’s (KIB) Chairman Sheikh Mohamed Jarrah Al Sabah announced the issuance of an AT1 Sukuk. On Wednesday 29 May 2019, KIB has successfully priced a $ 300 Million AT1 perpetual Sukuk that classifies under Tier 1 capital at an annual profit rate of 5.625%. KIB received an immense investor demand as evidenced by an oversubscription rate of over 15 times. This issuance has been arranged with efforts made by a group of participating parties including Citi and Standard Chartered who acted as Joint Global Coordinators. Dubai Islamic Bank, First Abu Dhabi Bank, KFH Capital and KAMCO acted as Joint Lead Managers and Bookrunners. Boubyan Bank acted as Co-Manager.

#Kuwait International Bank starts marketing $300mln #sukuk

Kuwait International Bank started marketing $300 million perpetual sukuk to boost its tier 1 capital, with a yield of around 6.25%. Perpetual bonds mimic some of the characteristics of equity because they lack a maturity date. Citigroup, Dubai Islamic Bank, First Abu Dhabi Bank, KAMCO Investment Co, KFH Capital Investment Company, and Standard Chartered Bank have been hired to lead the transaction.

Malaysia leads global sukuk issuance

Malaysia continued to maintain the leadership as the largest issuer of sukuk globally with a total of US$13.9 billion in the first three months of 2019. This means a market share of 35.2% from the overall issuance of US$39.5 billion during the period. This also represented an increase of 54.4% compared with US$9 billion that Malaysia issued in the first quarter of 2018.

Global #sukuk market to hit $2.7trln by 2030: Franklin Templeton

According to investment management firm Franklin Templeton, the global sukuk market is set to grow at a compound annual rate of around 15% to reach $2.7 trillion by 2030. Global sukuk issuance stood at over $477 billion at the end of last year, but has slowed somewhat in recent years. Ratings agency S&P in January described sukuk issuance as 'mild' in 2018, as the total amount of sukuk issued dropped by 5% to $114.8 billion. It forecast issuance of $105 billion-$115 billion for 2019. Mohieddine Kronfol, head of fixed income at Franklin Templeton, forecasts that the growth continues at a relatively rapid pace. In GCC markets several corporate entities have been issuing debut sukuk in recent months. Saudi Telecommunications Company issued its debut $1.25 billion sukuk on Sunday, following on from Saudi food company Almarai’s first $500 million sukuk in February.

#UAE's Majid Al Futtaim markets green dollar #sukuk

UAE-based shopping mall operator Majid Al Futtaim is set to raise between $500 million and $650 million in green sukuk. The proceeds of the sukuk will back environmentally-friendly projects in areas such as renewable energy and sustainable water management. The price guidance for the deal, which has so far attracted around $2.7 billion in orders, subsequently went down to around 225-230 basis points over mid-swaps. HSBC and Standard Chartered have been hired as global coordinators for the planned deal, and they are working as bookrunners along with Abu Dhabi Islamic Bank, Dubai Islamic Bank, ENBD Capital, First Abu Dhabi Bank, and Gulf International Bank.

SC sees good year ahead for #sukuk

Malaysia could see more Islamic capital market funds raised this year as sukuk activity has picked up in the first quarter of 2019. According to Securities Commission Malaysia (SC) deputy CEO Datuk Zainal Izlan Zainal Abidin, sukuk issuances are picking up over last year’s level. The government recently announced the revival of the East Coast Rail Link and the Bandar Malaysia projects, brightening investor sentiment which has been dampened lately. According to SC data, Malaysia’s Islamic capital market was valued at RM1.88 trillion or 61% of the nation’s overall capital market as at end-2018, down from RM1.9 trillion the year prior. Malaysia is the world’s largest sukuk issuer, having accounted for 51.6% of global outstanding sukuk as at endJune 2018.

Dar Al Arkan set to redeem $400m Islamic bond

Saudi Arabia’s Dar Al Arkan Real Estate Development Company aims to redeem its $400-million sukuk by using internal cash reserves. The sukuk, listed on Irish Stock Exchange and Nasdaq Dubai, is set to mature on May 28, 2019. Over the last decade, Dar Al Arkan has issued nine international sukuks and post redemption of 2019 sukuk and Dar will continue to have $1 billion of sukuks. CEO Andy Raheja said that Dar Al Arkan had cash and cash equivalents near SR5 billion. Given the strong free cash flow conversion, the company sees no immediate need to issue any new Sukuks for the foreseeable future.

Government decides to issue fresh #Sukuk worth Rs 200 billion

Pakistan's Federal Government has decided to issue fresh Sukuk worth Rs 200 billion, in addition to earlier Sukuk of Rs 200 billion through the same consortium of Islamic banks aimed at reducing circular debt. The consortium comprising Meezan Bank Limited, Faysal Bank Limited, Bank Islami Pakistan Limited, Dubai Islamic Bank Pakistan, MCD Islamic Bank Limited and Al Baraka Bank Pakistan Limited have already submitted their term sheets to the Finance Division. The syndicate of Islamic Banks had also forwarded a tentative term sheet for Rs 100-200 billion which specifies that the facility is subject to availability of suitable assets. The energy sector's circular debt is around Rs 1.5 trillion. According to Minister for Power, Omer Ayub, the government would bring down circular debt to Rs 250 billion by December this year.

Islamic GCC Bond Sales Fall by 32 Percent Due to Oil Price Hike

According to Moody’s Investors Service, the GCC region's sukuk issuance fell by 32% to reach $16.7 billion in the first half of 2018. This contributed to a reduction in the Gulf’s overall share of the global sukuk issuance to less than a third (30%) compared with 39% a year earlier. The GCC also dragged down total global issuance which fell by 12% to reach $55 billion in the first six months of the year. Recovery in the oil price has reduced pressure on Gulf government’s budget deficits and helped lower their borrowing requirements. While Islamic bonds have fallen out of favour in the Gulf, their appeal remains strong in Malaysia. The South-East Asian country increased its issuance by 9% in the first half of the year to reach $22.4 billion, making it the world’s leading Sukuk issuer.

ADIB's Riad Sees Strong Uptick in #Sukuk Activity in Second Half

In this interview Amir Riad, head of corporate finance at Abu Dhabi Islamic Bank (ADIB) talks about the UAE's economy and the lender's sukuk business. Riad sees a positive traction as the oil price is stabilising and the capital markets are deepening. ADIB has just announced the issuance of a new tier 1 sukuk, which replaces the bank's issuance in 2012. He expects a strong sukuk activity in the second half for the whole GCC region.

#Saudi Arabia sells 4 billion riyals of domestic #sukuk

Saudi Arabia's finance ministry sold 4.0 billion riyals ($1.1 billion) of domestic Islamic bonds in its monthly auction. The issuance is actually a re-opening of the issue originally made in July. The ministry sold 2.25 billion riyals of five-year sukuk, 500 million riyals of seven-year and 1.25 billion riyals of 10-year, bringing the total issue size to 7.465 billion riyals.

ADGM’s aviation finance structure utilized in #sukuk issuance

Abu Dhabi Global Market (ADGM) has facilitated the transaction of a 12 year Sukuk issued by Natixis and Noor Bank. It is the first instance where an ADGM structure has been used specifically to hold aircraft assets for issuing Sharia compliant bonds. The transaction follows the successful completion of the first aviation sale and leaseback transactions arranged by Natixis in ADGM in late 2016 and the registration of three international aviation leasing companies earlier this year. ADGM aims to position Abu Dhabi as an international aviation finance hub to deliver bespoke solutions for both Islamic and Conventional transactions.

#Sukuk remains a key vehicle for infrastructure financing in Asia

Sukuk remains an important segment in Islamic finance in Asia where they are preferentially used to fund large public or private infrastructure or combined public-private projects. Recent estimates by the Asian Development Bank (ADB) have put the infrastructure financing needs of developing Asian economies at $22.6tn from now up to 2030, which equates to $1.7tn per year. Looking back, more than ten Asian countries issued a total of $73.1bn in infrastructure sukuk between 2002 and the end of 2015. Malaysia’s ongoing Economic Transformation Programme is expected to accelerate the issuance of Infrastructure sukuk. In addition, China’s Asia-wide Belt and Road Initiative has created a business case for Islamic funding. The Philippines and Indonesia are both seeking to use sukuk for badly needed infrastructure improvements. Kazakhstan and more Central Asian countries are expected to follow.

#Bahrain's GFH Financial Group pays off $200m #sukuk

GFH Financial Group has paid the entire amount of its $200 million sukuk, which was originally drawn in 2007. The facility has now been settled with a recent payment of an outstanding amount of $34 million. With this repayment, GFH said it frees up further assets pledged under the sukuk for potential disposal or exit. In 2008, GFH had financing liabilities in excess of $1 billion compared to $125 million today. According to Chairman Jassim Al Seddiqi, with its prudent approach to managing liabilities, strong cash generation and levels of liquidity, GFH continues to be better placed than ever to deliver value and further build its business lines.

#Qatari issuers raise $19.97bn, lead GCC bonds and #sukuk market in H1

According to a recent report by Kuwait Financial Centre, Qatari issuers led the GCC aggregate bonds and sukuk market in the first half of this year, raising a total of $19.97bn. The report stated that the aggregate primary issuance of bonds and sukuk by GCC entities, including central banks’ local issuances, GCC sovereign and corporate issuances, totalled $95.25bn in H1, 2018, which represents a 9.64% increase on H1, 2017. Qatar raised $12bn and Kuwait was the only GCC sovereign entity not tapping the international bond markets in H1, 2018. Conventional issuances raised $50.17bn, or 80.19%, of the total amount raised in GCC bonds and sukuk market during H1, 2018. Sukuk raised $12.39bn, 30.84% lower compared to $17.93bn raised in H1, 2017 and represented a share of 19.81% of the market in H1 2018.

World’s first ESG #sukuk #fund another step forward for #Malaysia’s responsible finance

Malaysia’s Shariah-compliant BIMB Investment Management launched the world’s first environmental, social and governance (ESG) sukuk fund on August 1. BIMB’s ESG Sukuk Fund is the company’s fifth ESG-focused fund as a result of its partnership since 2015 with London-based Arabesque Asset Management. BIMB Investment CEO Najmuddin Mohd Lutfi said the company plans to launch more ESG that incorporates fintech like artificial intelligence, machine learning, big data, data analytics. The next investment focus could be in U.S. equity and multi-asset funds.

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