IslamicFinance.de

The Islamic lending arm of Turkey’s state-run Ziraat Bank has applied to sell 1.5 billion lira ($501.9 million) worth of Islamic bonds, according to Turkey’s Capital Markets Board (SPK). The sale would be the first by a state-run Islamic bank, and follows a wider government push to develop the sector in the world’s eighth most populous Muslim nation. No tenor or details of underlying assets were given for the deal, which will be sold to qualified investors. Islamic lender Kuveyt Türk also applied for 1.85 billion lira worth of sukuk. Ziraat Participation Bank started operations in May 2015, with 675 million lira in paid-up capital and plans to have 170 branches and 2,200 staff by the end of 2018.

Sukuk is already this year proving the format of choice for issuers in the Middle East. And no wonder — Islamic notes have a captive and asset-starved investor base, which tends to ensure strong secondary performance. It is an ideal product for times of stress such as those brought about by plummeting oil prices. Andy Cairns, head of origination and distribution at National Bank of Abu Dhabi explained that Islamic accounts are buy and hold so there is less secondary liquidity in Sukuk than in conventional bonds. Consequently it is a product that frequently underperforms in strong markets but outperforms in tougher times. Sukuk offers issuers access to an underserved pool of Islamic investors.

Hong Kong’s possible third Islamic global bond in three years brings it closer to Indonesia and Malaysia in terms of sovereign sukuk presence, a boost to the market that coincides with China’s Silk Road revival. The finance center has already raised $2 billion from sales in 2014 and 2015, which attracted $6.7 billion in total orders, while Indonesia plans to tap investors for the sixth year running and Malaysia is returning for its seventh offering. Hong Kong, which is losing its role as a gateway to China as Shanghai’s financial market opens, is keen to become the launchpad for the global ambitions of Chinese companies.

Khazanah Nasional Bhd has priced a 5-year US$750mil (RM3.15bil) US dollar-denominated straight sukuk to refinance Penerbangan Malaysia Bhd guaranteed notes at a significantly lower cost. The USD sukuk will be issued via Danga Capital Bhd. The USD sukuk was priced at a profit rate of 3.035% following an accelerated bookbuilding process which attracted demand of 1.5x booksize from financial institutions, asset management companies, statutory bodies and insurance companies. Khazanah achieved its target issue size at a spread of 178 basis points above prevailing 5-year US Treasuries. CIMB and DBS Bank Ltd are the Joint Global Coordinators while CIMB, DBS Bank Ltd. and Standard Chartered Bank are Joint Bookrunner.

Malaysian sovereign wealth fund Khazanah Nasional Berhad is marketing five-year US dollar sukuk in the US Treasuries plus 190bp area. CIMB, DBS and Standard Chartered are lead managers for the deal that is expected to price today. The Reg S senior unsecured bonds will list in Malaysia and Singapore under English and Malaysian law. The sukuk will be issued through Danga Capital Berhad, a special purpose vehicle, with the SWF acting as obligor. They will be issued off a multi-currency Islamic securities issuance programme.

Qatar Islamic Bank (QIB) could use future sukuk issues to back a potential acquisition, its chairman Sheikh Jassim bin Hamad al-Thani said, after shareholders approved increasing the amount it could raise from issuing Islamic bonds. The Gulf state's largest sharia-compliant lender won approval at its annual general meeting to double its sukuk programme to $3 billion, as well as retaining the mandate to issue 3 billion riyals ($824 million) to enhance core capital. QIB was fine with its capital reserves at present, its chairman said as the bank had a total capital adequacy ratio of 14.1 percent at the end of December, above a minimum requirement of 12.5 percent.

Islamic Development Bank (IDB) will start roadshows from Sunday for a potential dollar-denominated sukuk issue for the Jeddah-based supranational institution, a document from lead arrangers showed. The AAA-rated IDB has picked Boubyan Bank, CIMB, Emirates NBD Capital, Gulf International Bank, JP Morgan, Natixis and Standard Chartered Bank to arrange the transaction, the document showed. Investor meetings will start on Sunday in Riyadh before moving to Kuala Lampur on Tuesday and concluding in the United Arab Emirates on Wednesday.

RAWABI Vallianz Offshore Services (RVOS), an equally-owned joint venture between Rawabi Holding and Vallianz Holdings Limited, has appointed Alinma Investment Co., Saudi Fransi Capital, Saudi Hollandi Capital and GIB Capital LLC as Joint Lead Managers and Book-Runners for its first issuance of a SR1 billion Shariah - compliant sukuk. The sukuk were sold through a private placement to sophisticated investors in full and are to be used to partially finance the marine assets of RVOS over a period of five years. Rawabi Holding provides a range of products and services in the fields of oil and gas, petrochemicals, engineering and construction, power and manufacturing in the Kingdom of Saudi Arabia and the Middle East. Vallianz Holdings Limited is a provider of offshore support vessels and integrated marine solutions to the oil and gas industry.

The government will sell sharia-compliant bonds for retail investors over the next two weeks to help plug the state budget deficit and deepen the local bond market, senior finance ministry officials said. The thee-year Islamic bond would be sold at its face value, starting Friday until March 4, 2016, bearing a coupon of 8.3 percent. At that rate, the sukuk would yield 80 basis points higher than time-deposit interest guaranteed by the Deposit Insurance Agency (LPS) and 130 bps higher than the benchmark rate set by the central bank. The government seeks to raise between Rp 25 trillion and Rp 30 trillion ($1.85 billion-$2.22 billion) from the sukuk sale.

The Securities and Exchange Commission (SEC) and the Debt Management Office (DMO) have inaugurated a committee for the nation’s first sovereign Sukuk. Mr Mounir Gwarzo, SEC Director-General, who confirmed the committee’s inauguration, said it comprised staff of the commission and DMO, and would set up modalities for the first sovereign bond. He said that Sukuk had not been approved by the commission at the moment. Gwarzo said that recently, the commission was working with the DMO to ensure issuance of the bond in the second quarter of 2016. He said that the commission would support DMO in capacity building to ensure successful issuance of the bond.

Kenya is reviewing all laws and regulations governing its nascent Islamic finance industry to aid the issuance of a debut Islamic law-compliant bond, its attorney general said. The East African nation, which issued its first Eurobond in 2014, wants to expand the range of financing available for infrastructure projects like roads and power plants. The Treasury has said it is looking at the possibility of issuing the sukuk in the 2016/17 fiscal year, starting in July, but it has not offered details. Githu Muigai the review of that entire regulatory framework will be completed in a maximum of nine months. Kenya's central bank licensed two shariah-compliant banks in 2007. At least one firm has since started to offer Shariah-compliant insurance products.

The US$2 trillion Islamic finance industry has grown rapidly over the past decade fueled in part by a robust sukuk market and a growing Islamic asset management industry. Going forward, Islamic finance is expected to grow in response to expanding economies in countries with a growing Muslim population and amid increasing demand for Shariah-compliant investments. On Thursday February 18, the Islamic Finance Summit took place in the city of Jakarta. The summit discussed highlights of the past year as well as offered glimpses of what’s ahead. Participants of the summit also heard Indonesia’s plans for developing Islamic finance.

Oman Telecommunications Co (Omantel) cancelled plans for what would have been a $130 million, five-year dual-currency sukuk issue due to high interest rates from lenders, the company's CEO Talal al-Mamari said. The sukuk was priced last month at a profit rate of 5.3 percent, after receiving commitments worth $82.1 million in the dollar tranche and $47.9 million in the Omani rial tranche. But in a statement Wednesday to Muscat's bourse, Omantel announced it would postpone issuing the sukuk at the present time. Proceeds from the Sukuk would have helped to fund the company's new headquarters and to diversify its investment portfolio. Mamari said Omantel's investments would not stop, but did not give further details.

International Islamic Liquidity Management Corp (IILM) plans to sell US$1.34bil (RM5.54bil) of three-month bills, its biggest offering since being set up in 2010 to support syariah-compliant financial activity. The Kuala Lumpur-based institution would auction the Islamic notes on Feb 18, it said in a statement. IILM has a short-term issuer rating of A-1 from Standard & Poor’s, and has sold a total US$14bil of debt denominated in the US currency. While IILM has increased issuance of short-term paper each year since its debut offering in 2013, the supply is far short of the US$400bil that Ernst & Young LLP estimates is needed to help Islamic banks manage their liquidity.

Malaysia retained its leading position as a sukuk hub in 2015, accounting for 53% of global issuance at the end of the year, RAM Ratings head of Islamic finance Ruslena Ramli said. Although the performance pales in comparison to the country's 69% of share of global sukuk as at end-2014, the ringgit remained the currency of choice accounting for 39% of sukuk issuance followed by the US dollar (32%) and the Indonesian rupiah (9%). However, RAM Ratings noted that Malaysia's share of outstanding global sukuk had declined to 52% in 2015 from 55% in 2014 due to the weaker ringgit. On the overall global sukuk market, RAM Ratings noticed an increase in sukuk issuance from new markets, as Oman and the Ivory Coast have joined the growing list of sovereign sukuk issuers.

Oman Telecommunications Co (Omantel) has scrapped plans to issue a $130 million five-year dual-currency sukuk, the former monopoly said. Last month, the state-run company priced the sukuk at a profit rate of 5.3 percent, having received commitments worth $82.16 million in the dollar tranche and 18.4 million rials ($47.86 million) in the rial tranche. But Omantel has shelved plans to issue the sukuk at the present time, it said in a statement to Muscat's bourse. The company said it took this decision following discussions with its advisers, but did not elaborate.

Saudi Arabia's Bank Albilad plans to issue 1 to 2 billion riyals ($267-533 million) of sukuk by the end of the second quarter of 2016 to finance expansion, chief executive Khaled al-Jasser said. The bank plans to open 25 new branches and hire more employees, which Jasser said would likely increase costs this year by 15 to 17 percent. The bank will also move toward a strategy of owning rather than renting its branches, he said. Given weak market conditions, Jasser said the bank would prefer not to distribute dividends at the moment.

Kuwait Finance House Turkey (KFH-Turkey) issued Tier 2 capital-boosting sukuk worth $350 million to support its capital situation. The bank has set the yield at 7.9 percent for 10-year tenure. The sukuk will be listed on the Irish Stock Exchange for trading. The credit rating agency "Fitch" assigned an expected rating of BBB- to this tier 2 Basel III-complaint issue. The bank targets boosting its capital adequacy ratio so it can grow and enhance its presence in the international markets, said CEO- KFH -Capital Abdulaziz Nasser Al-Marzouq. KFH -Turkey mandated international banks and financial institutions led by KFH -Capital as a global coordinator, manager and syndicator, in addition to other lead managers and syndicators which are HSBC, Dubai Islamic Bank (DIB), Nour Bank, QInvest Investment Bank, Emirates NBD, and KAMCO Investment Company.

As Italy's demand for mini-bonds grows, Nctm Studio Legale (Nctm), a law firm, has hired Shariyah Review Bureau (SRB) to help it structure an Islamic Bond. Under the agreement, SRB will collaborate with Nctm to help structure and certify the mini-bonds in light of Sharia guidelines. Shariyah Review Bureau team has many years of experience in a range of industries, specializing in Investment Funds, banking, insurance, agriculture, and Asset Management. The demand for their services has quadrupled over the years with 2015 being the most eventful year. SRB expects this Islamic bond to open new venues of connecting capital with businesses in Italy and also help provide new opportunities to the SME sector.

Hogan Lovells advised the Islamic Corporation for the Development of the Private Sector (ICD), as arranger, on the arrangement of an inaugural CFA 150 billion sukuk offering by the government of Ivory Coast. The debut sukuk is an amortising sukuk al-ijara targeted at local banks and institutional investors. The offering mirrors a successful Senegal sukuk that Hogan Lovells advised on in 2014. The team was led by the firm’s global head of Islamic finance, Rahail Ali, and partner Imran Mufti. They were assisted by debt capital markets partner Baptiste Gelpi, in, Paris and Lina Bugaighis, Dubai. Bensaid outlines the sukuk sector as very promising, referring to recent developments which have seen governments focusing more on creating a more enabling environment for sukuk issuances.