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While rating agency has mixed views on the performance of the sukuk market this year, Maybank Islamic Bank Bhd says it remains mindful of the challenging economic backdrop. Its chief executive officer Muzaffar Hashim said the Islamic bond issuance activity, which saw its peak in 2012, is closely tracking the volatile external developments such as Greece debt default risk and US interest rates hike. RAM Rating said new global sukuk issuance is expected to be strong this year at around US$100 billion (RM371 billion) to US$120 billion (RM445 billion) while Standard & Poor’s warns of a slowdown in emerging markets as reduced confidence and low oil prices hit investor demand.

Maxis Bhd has issued the first series of its sukuk murabahah of RM840mil in nominal value pursuant to its unrated sukuk murabahah programme. The tenure is for 10 years from the issue date. The country’s largest mobile phone operator plans to raise as much as RM5bil from a 30-year sukuk for its capital expenditure (capex) and debt refinancing. The company said in a filing with Bursa Malaysia yesterday that the unrated sukuk murabahah programme would be available 30 years from the date of the first issuance, which should be made within two years of approval. The issue price as well as coupon rate and yield to maturity of the Islamic bond will also be fixed prior to each issuance.

Malaysia's Tenaga Nasional Bhd is seeking to raise as much as 10 billion ringgit ($2.7 billion) in an Islamic bond issue to develop a power plant project it is planning to take over from debt-laden state fund 1MDB. The planned purchase of 1MDB's 70 percent stake in 3B, a greenfield 2,000 MW coal-fired plant project, will take the pressure off 1MDB to find the funds to develop the project and help it focus on paring down debt of more than $11 billion - a burden that has weighed on Malaysia's currency and its credit rating. It also fits well with Tenaga's own energy supply needs, although some analysts are worried that the company may end up overpaying if the government pushes for 1MDB to gain the best deal it can.

Small Medium Enterprise Development Bank Malaysia Bhd (SME Bank) is getting closer to reaching its target of turning into a full-fledged shariah development finance institution (DFI) with its Islamic financing portfolio now standing at 86.5 per cent amounting to RM4.31 billion. The target is to achieve 90 per cent Islamic financing portfolio by December 2015. When SME Bank was set up in October 2005, the Islamic financing portfolio was only 15 per cent. Group managing director, Datuk Mohd Radzif Mohd Yunus, said convincing customers to switch to Islamic financing was not a major challenge. SME Bank, through its unit, Centre for Entrepreneur Research and Development Sdn Bhd, and Islamic Banking and Finance Institute of Malaysia, developed and conducted the Chartered Islamic Development Banker programme.

Sukuk issuance plunged in the first five months of this year after Malaysia’s central bank stopped issuing short-term Islamic bonds, data from Standard and Poor’s showed. Issuance fell to US$33.7 billion in the year to May 31, down from $50.5bn in the same period of last year, according the rating agency’s figures. Bank Negara Malaysia (BNM) was responsible for about $10bn of sukuk issuance last year, mostly in short-term sukuk with tenors of three months. Overall sukuk issuance excluding BNM was down 5.1 per cent against the previous year’s figure of $35.5bn. Demand for sukuk from investors outside the Islamic world has been significant, but a shortage of supply characterises an industry segment in which highly-rated sovereign issuances are sought after and many times oversubscribed. The collapse in the price of oil could further harm sukuk issuance.

The sustained effort to enhance the regulatory and legislative framework to support Islamic financial transactions will continue to place Malaysia as the biggest player in the global Islamic banking industry, says CIMB Islamic Bank Bhd. Chief Executive Officer Badlisyah Abdul Ghani said despite the growing competition from other markets, such as Indonesia and Saudi Arabia, Malaysia's better and firm framework would be a value added. Nevertheless, Badlisyah said due to the aggresive external environment, Malaysia should always come out with compelling, commercially driven products, to clearly distinguish itself from competitors. Badlisyah was a speaker at a panel discussion on "The Future of Islamic Banking: Where Do We Go From Here?"

Malaysia’s Islamic insurers are seeking to double policy holders in five years by investing more in digital technologies to attract a younger audience, according to Ahmad Rizlan Azman, chairman of the Malaysian Takaful Association. Takaful operators should also step up educational campaigns to boost customers to 8.4 million by 2020 from about 4 million now, he said. Attracting more professionals is another prerequisite to achieving Malaysia’s targets, Ahmad Rizlan added. Syarikat Takaful’s Mohammad Hassan said the nation’s Islamic insurers have to push for innovative new ideas to keep their growth momentum going. The company is considering an acquisition in the next two years to increase its customer base, he said.

The country’s largest mobile phone operator, Maxis Bhd, is planning to raise as much as RM5bil from a 30-year sukuk for its capital expenditure (capex) and debt refinancing. The company said in a stock exchange filing that the unrated sukuk murabahah programme would be available 30 years from the date of the first issuance, which should be made within two years of approval. The issue price of the Islamic bond will also be fixed prior to each issuance. It added that the Islamic medium-term notes might be with or without periodic profit payments. The coupon rate and yield to maturity would also be fixed prior to each issuance of the sukuk. CIMB Investment Bank Bhd is the sole principal adviser and the sole lead arranger for the programme.

The Malaysia unit of Japan's Toyota Motor Corp. plans to setup a 2.5 billion ringgit ($667 million) programme to raise funds via both conventional and Islamic bonds. The proposed programme from Toyota Capital Malaysia Sdn Bhd was rated AAA by RAM Ratings, and follows a 1 billion ringgit sukuk programme setup in 2008 that matured earlier this month. The Malaysia unit has two other conventional debt programmes that can raise a combined 1.8 billion ringgit; It sold a debut sukuk in 2008. The move comes at a time when Japanese firms are renewing efforts in the sector, with Japan's financial regulator relaxing rules for domestic banks to use Islamic financial products.

1Malaysia Development Bhd (1MDB) today rebutted claims by former prime minister Tun Dr Mahathir Mohamad saying that a cabinet paper was presented and approved for the issuance of a government guarantee RM5 billion sukuk by Terengganu Investment Authority (TIA). TIA was renamed 1MDB in 2009 after the federal government took over. In a statement today, 1MDB also said that the guarantee was not off-budget, and that Putrajaya was fully liable for the amount it had guaranteed. 1MDB also denied Dr Mahathir's claim that the RM2 billion loan it obtained from Ananda Krishnan was used to pay interest on its loans. It also questioned the "motivation" behind Dr Mahathir's allegations, which it said had numbers and figures changing every time.

Bank Islam Malaysia Bhd expects a moderate and slower performance in 2015 with assets to grow at 10% and financing at 15% due to the current economic challenges. The consumer market sector has been noticeably slowed down, especially with the guidelines of the introduction of responsible financing by Bank Negara (Malaysia), Managing Director Datuk Seri Zukri Samat said. Bank Islam, which currently has 142 branches nationwide, will open eight more branches, including in the rural areas by year-end, he added after presenting RM12.74 million in business tithe to Minister in the Prime Minister's Department Datuk Seri Jamil Khir Baharom in Kuala Lumpur. At the same event, Bank Islam introduced 'Mudah Zakat', a multi-channel tithe payment system to improve tithe management efficiency.

Malaysia's efforts to create a market for ethical Islamic bonds are the latest in a series of government-led initiatives to develop Islamic finance, but further expansion will require a greater buy-in from a sometimes reluctant private sector. In May, sovereign wealth fund Khazanah Nasional launched the country's first sustainable and responsible investment (SRI) sukuk, nearly two years after the format was first announced by the government. Last year, $74.9 billion worth of sukuk were issued out of Malaysia but only $13.5 billion came from corporate issuers. There is little sign of this changing soon.

Bank Negara said it would finalise operating standards for all major Islamic finance contracts by the end of this year, creating the first comprehensive set of practical guidance for the industry. The set of 11 standards will complement existing sharia guidelines issued by Bank Negara, as the regulator aims to address inconsistencies in the use of Islamic contracts. Malaysia’s current sharia standards are enforceable and have been in place for years, but they are technical rather than practical and still open to interpretation, Mohamad Akram Laldin, deputy chairman of the sharia advisory council of Bank Negara said. The new standards could help regulators in other countries that are seeking day-to-day guidance for their own markets, said Laldin.

Deputy Prime Minister Tan Sri Muhyiddin Yassin has launched a new National Higher Education Savings Scheme (SSPN-i), the SSPN-i Plus, a scheme which incorporates education savings with affordable and comprehensive takaful coverage. Muhyiddin, who is also Education Minister, said SSPN-i Plus was an initiative under the National Higher Education Fund Corporation (PTPTN), aimed at promoting the habit of saving for higher education among Malaysians. Depositors in this syariah-compliant scheme not only invest for their education but will also receive takaful coverage, coupled with competitive dividend returns and tax relief of up to RM12,000 a year.

Volatile currency markets could hamper Malaysian mortgage lender Cagamas Bhd's plans for its first foreign currency sukuk, the state-backed firm's chief executive Chung Chee Leong said. In November, Cagamas set up a US$2.5 billion (RM9.2 billion) programme to issue multi-currency sukuk in an effort to broaden its investor base. Chung said that at this moment, dollar was just not attractive, adding that US dollar issue was still the most likely option. He hopes the issue could still come this year. Asked about expansion plans, Chung said Cagamas was not working on opening subsidiaries in other countries, but would rather aim to take on loans that Malaysian lenders made outside the country through their Malaysian offices.

BIMB Holdings Bhd’s share price on Bursa Malaysia reacted well following announcement that its wholly-owned subsidiary, Bank Islam Malaysia Bhd aimed to increase the fund of two products under its Term Investment Account over the next six months. As at 10.26am today, the counter was four sen better at RM4.05 with 4,900 shares changing hands. Bank Islam is aiming for a RM2 billion fund for Waheed Investment Account (WIA Wakalah) and Special Investment Account (Mudarabah). Another account, the Al-Awfar Account, was also launched today. The bank also planned to maintain a RM2 billion fund size under its Transactional Investment Account.

Bank Negara Malaysia said it would finalise operating standards for all major Islamic finance contracts by the end of this year, creating the first comprehensive set of practical guidance for the industry.The set of 11 standards will complement existing shariah guidelines issued by Bank Negara, as the regulator aims to address inconsistencies in the use of Islamic contracts. The regulator has sought wide industry feedback and is expected to update the new standards regularly to keep up with changing market practices. Malaysia's current shariah standards are enforceable and have been in place for years, but they are technical rather than practical and still open to interpretation.

Al-Rajhi Bank (Malaysia) provided RM325,000 in funding today to two education centres under the management of Yayasan Salam. The centres are the Taska Baitul Amal and Pusat Jagaan Baitul Amal, and the funding was under the bank's corporate social responsibility (CSR) Baitul Amal Children's Programme which provides for 70 children from the ages of two months to six years. Roseta Mohd Jaafar, Al-Rajhi Bank's vice-president and head of corporate communications said the programme was geared towards helping underprivileged children in the Jalan Chow Kit area. Registered under the Social Welfare Department, the Taska Baitul Amal was officially launched on July 19, 2010 and the Pusat Jagaan Baitul Amal on January 2, 2012.

TH Plantations Bhd has issued RM1bil of sukuk murabahah to parent company Lembaga Tabung Haji (LTH) to raise funds for its subsidiaries to repay their bridging loans. The RM1bil sukuk is part of the sukuk murabahah programme of up to RM1.2bil in nominal value set up by its unit, THP Suria Mekar Sdn Bhd, with LTH. RHB Investment Bank Bhd has been appointed as the principal adviser, lead arranger, facility agent and lead manager for the sukuk programme. In separate announcements, TH Plantations said it had appointed as directors LTH deputy group managing director and chief executive officer Datuk Johan Abdullah, Datuk Md Yusop Omar and Datuk Shari Osman.

BIMB Holdings Bhd is expecting a 15% growth in assets for its banking arm Bank Islam Malaysia Bhd for 2015, despite saying that it will be a very challenging year for the banking industry. Hizamuddin Jamalluddin, chief strategy officer of the managing director's office, said the expected asset growth is based on the group's current balance sheet. He added that in terms of loan growth, the group is expecting this year's growth to be similar to that of last year's. Hizamuddin was speaking to reporters during BIMB's launch of three new term investment accounts under the Islamic Financial Services Act 2013 (IFSA). The three products launched are the Special Investment Account Mudarabah, Waheed Investment Account Wakalah, and the Al-Awfar Account.