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Guidance Capital Markets announced it closed a three year Sukuk issuance for the Saudi Arabian conglomerate Al Bayan. The USD denominated Sukuk was issued last week through a private placement with three GCC banks, and was led by Guidance, who also acted as financial advisor to Al Bayan. The issuance is one of the first transactions of its kind, where a private conglomerate in KSA closed a USD dollar Sukuk through a private placement.

Gulf borrowers are back in the bond market, and a new pattern is emerging. GCC bond sales climbed 32% to a total $15.9 bn this year, according to data compiled by Bloomberg. Dubai’s government sold a $569 million privately-placed sukuk in March and Emirates NBD raised $499 mn from such deals. Bahrain and Oman have also opted to privately place sovereign issues. Rizwan Kanji, consultant at King & Spalding said most private-placement issuances are underwritten by the arrangers, which provides the issuer with certainty of execution and pricing.

Bank Al Jazira will meet local fixed income investors this week for a sukuk sale which will improve its Tier 2. The transaction will likely run for ten years but includes an option to redeem the sukuk after five years. It is being arranged by GIB Capital, as well as the bank's own investment banking arm. Bank Al Bilad has chosen HSBC's Saudi Arabian arm to arrange its own Tier 2-enhancing sukuk issue. According to their respective financial statements, Bank Al Jazira's CAR was 15.83% at the end of 2015. At the same point, Bank Al Bilad's CAR was 15.88%.

Emirates Islamic Bank has mandated banks including HSBC for the sale of Islamic bonds. The sale of the dollar-denominated, benchmark-sized securities may begin this week and the sale is arranged by Standard Chartered, Emirates NBD, Dubai Islamic Bank, Noor Bank and Bank ABC. Emirates Islamic Bank last sold bonds in July 2012, when it raised $500 mn from securities with maturity of between five and six years.

Dubai’s Noor Bank has picked seven banks to arrange investor meetings ahead of a potential Tier 1 dollar-denominated sukuk issue. Joint global coordinators include: Citi, Standard Chartered, Dubai Islamic Bank, Emirates NBD Capital, First Gulf Bank, Noor Bank and Sharjah Islamic Bank. Dubai’s government owns 48% of Noor Bank, which starts to hold meetings with fixed income investors in the Middle East, Asia and Europe.

#Dubai ports operator DP World has selected more than a dozen banks for its sale of Islamic bonds. Fifteen lenders have been hired for the offering of dollar-denominated, benchmark-sized securities whose maturity may be as long as seven years. Proceeds from the sale will be used for a tender offer for the company’s existing sukuk due in 2017.

Emirates Islamic Bank has mandated banks including HSBC for the sale of Islamic bonds. The sale of the dollar-denominated, benchmark-sized securities may begin this week and the sale is arranged by Standard Chartered, Emirates NBD, Dubai Islamic Bank, Noor Bank and Bank ABC. Emirates Islamic Bank last sold bonds in July 2012, when it raised $500 mn from securities with maturity of between five and six years.

OCBC Malaysia head of consumer financial services Lim Wyson said increasing the number of products under the Islamic asset class will appeal to a broader range of investors. The size of Malaysia’s Islamic capital market had more than tripled over the last 10 years, with an average growth of 11.7% per annum and accounted 60% of the entire capital market in the country.

RHB Islamic International Asset Management is favoring the sovereign and corporate debt in maturities of 7 to 10 years. CEO Sharizad Jumaat said the company sees limited currency weakness in 2016 and expects the key central bank rate to remain unchanged. Sharizad said the ringgit will be quite stable within the weak environment of slower growth in China and Europe.

Saudi International Petrochemical Company (Sipchem) plans to recall a sukuk maturing on July 6 three weeks early. The firm will send a notice to sukuk holders informing them of its intentions and will use available cash to pay it off. It originally issued 1.8 billion riyals of sukuk in 2011. Sipchem also plans to issue a new sukuk and appointed Riyad Capital and NCB Capital as lead managers for the issue.

Qatar's Ezdan Holding has priced a $500 mn five-year sukuk issue. The wakala-structured transaction carries a profit rate of 4.375 percent, equivalent to a spread over midswaps of 333 basis points. The reoffer price was 99.446 percent. Barwa Bank, Emirates NBD Capital, HSBC and Mashreq arranged the transaction and were joined by Abu Dhabi Islamic Bank before its close.

The Islamic Financial Services Board (IFSB) sees a potential for an increase of sukuk funding in 2016 in line with regulatory reforms in the industry such as Basel III and Guidance Note 6 (GN-6). Secretary-General Jaseem Ahmed said sovereign sukuk sector might gain momentum this year on the back of increased budget deficits, particularly in the energy-exporting countries. He added that Islamic banking assets showed a positive association with oil revenues while the liquidity and profitability of Islamic banks might be adversely affected by low oil prices.

International Islamic Financial Market (IIFM) found that the year 2015 saw a major drop in issuances when only $60.6bn of sukuk were issued, a 43%-slump compared to 2014. A large part of the decline in sukuk issuance was due to the policy decision of Malaysia’s central bank to discontinue the issuance of short-term investment sukuk. Lower sovereign spending in leading Islamic finance jurisdictions continues to take its toll, issuances are not likely to recover in 2016.

Boubyan Bank’s CEO Adel Abdul Wahab Al-Majed said the bank succeeded in covering its capital enhancement sukuk which was oversubscribed by more than 5 times the targeted amount, reaching US$ 1.3 bn. This was achieved during a marketing period of two weeks from the date of obtaining the regulatory approvals from the Capital Markets Authority and the Central Bank of Kuwait. Boubyan Bank issued US$ 250 million sukuk, priced at 100%, which will bear profit at a rate of 6.75%.

Turkiye Finans announced plans for a EURO denominated Sukuk. This represents the first Euro denominated Sukuk in Turkey, though a number of US Dollar Sukuk have been issued previously, most recently by Turkish subsidiary of Kuwait Finance House (Kuveyt Turk) which issued a $350 million Sukuk in February 2016. Kuveyt Turk also recently issued an innovative CPI linked Sukuk, which illustrates a maturing market in Turkey.

After a three-year pause The Islamic Development Bank (IDB) plans to sell ringgit-denominated sukuk in the Malaysian market. The IDB board has approved the issuance of up to 400 mn ringgit ($99.9 mn) in sukuk in 2016. IDB president Ahmad Mohamed Ali said it could be both private and public placement, but the specific size and timing of the deal depend on market conditions.

Capital Market Authority of Oman (CMA Oman) recently issued new sukuk regulations that aim to provide clarity and transparency to market players, while providing protection to investors in sukuk transactions. At the forefront of the historical initiative is Kemal Rizadi Arbi, a Malaysian who is an adviser at CMA Oman as well as a member of the Oman government’s sukuk committee. “It is to be noted that not all jurisdictions have specific and separate sukuk regulations, particularly in the Gulf Cooperation Council (GCC) countries, with many just having a conventional bond regulatory framework with some additions made on the syariah requirements. “In addition, it has been drafted to provide flexibilities and spur innovation in the market, among others introducing a new trust regulation and structure and allowing the issuance of a sukuk programme,” said Kemal in an email to Business Times recently.

Saudi International Petrochemical Company (Sipchem) will begin investors meetings in May for a potential issue of sharia-compliant bonds, the firm said on Sunday.
Sipchem has appointed Riyad Capital and NCB Capital as managers of the possible sukuk, the value of which "will be determined based on market conditions", according to a Riyadh bourse filing.
On March 28, Sipchem announced its board had approved issuing sukuk.

While the use of risk-sharing instruments for the funding of revenue-generating infrastructure projects is easy to understand, such instruments can also be used for the funding of non-revenue generating infrastructure. The principle of risk-sharing would require that the government's repayment of the obligation created be linked to some proxy or indicator of government revenue. Given today's conundrum with debt and the need to deleverage, GDP-linked securities are being revisited. Replacing the benchmark to LIBOR (London Interbank Offer Rate) with a benchmark to nominal GDP makes eminent sense, especially from a Shariah viewpoint.

Sukuk linked to Consumer Price Index (CPI) rate will provide investors protection against rising inflation in Turkey. The short term sukuk, known as rental certificates in Turkey was issued with a maturity of 729 days. The issue was subscribed by means of a private placement at a profit rate of 3.39 % above the CPI rate.