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The Philippines first sukuk issuance may have to wait a while despite recent pronouncements from both the private and the public sectors of plans to tap Muslim investors. Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said rules did not exist yet to allow firms or government agencies to issue debt instruments that comply with Islamic shariah laws. Last month, state-run National Home Mortgage Finance Corp. (NHMFC) said it planned to issue P2 billion in Islamic bonds in behalf of a Mindanao-based firm. NHMFC would tap government banks Land Bank of the Philippines and Development Bank of the Philippines as underwriters for the debt issuance.

The Thomson Reuters Global Sukuk Index is at 118.38699 points, up from 117.98384 at the end of last month and 115.79726 at the end of last year. The Thomson Reuters Investment Grade Sukuk Index is at 116.98763 points against 116.82783 at end-September and 113.69014 at end-2014. Among the sukuk in the pipeline are the following: The Tunisian government expects next year to launch a delayed sukuk issue, its first, for 1 billion dinars ($513 million). South Africa would like to issue more sukuk so there is enough liquidity to build an investment curve. Qatar Islamic Bank was to hold investor meetings in Asia, the Middle East and Europe from Oct. 16 for a possible benchmark offer of U.S. dollar sukuk.

Qatar Islamic Bank will hold investor meetings in Asia, the Middle East and Europe starting on Friday for a possible benchmark offer of U.S. dollar-denominated Regulation S senior sukuk, leads said on Wednesday. The bank mandated Barwa Bank, Citi, HSBC, Noor Bank, QInvest and Standard Chartered as joint lead managers for the possible issue, which would be off Qatar Islamic's existing $1.5 billion Trust Certificate Issuance Programme. Benchmark usually means at least $500 million.

King & Spalding has advised the Islamic Development Bank (IDB) on the establishment of a $25 billion Sukuk programme, triple listed on the London Stock Exchange, Nasdaq-Dubai and Bursa Malaysia. The programme is rated “AAA” by S&P and Fitch and “Aaa” by Moody’s. King & Spalding’s Kanji advised the IDB on the transaction with assistance from Dubai-based senior associate Hamed Afzal and Washington, D.C.-based transaction specialist Gina Bunker. The lead manager on the transaction was Standard Chartered Bank plc and dealers included CIMB, HSBC, National Bank of Abu Dhabi, Natixis and Standard Chartered Bank.

Short term Sukuk rated A-1 by Standard and Poor’s Rating Services (S&P’s) have been issued by the International Islamic Liquidity Management (IILM). The 3 month sukuk for $860 was issued at a profit rate of 0.63960%. Orders for $980m were received. IILM sells its Sukuk through its primary dealers which were added to in this auction by Qatar Islamic Bank and Boubyan Bank. As at October 2015, the IILM Sukuk that have been issued and reissued amounted to USD12.69 billion.

The Islamic banks wanted for long some sort of bonds from the Bangladesh Bank (BB) to invest in to the fulfilment of the statutory liquidity ratio (SLR), as required by the regulator. But only in 2014, did the BB come out with an offer of interest-free bonds to the Islamic banks, which now control one-fourth of the deposit market. If the Islamic branches of the interest-based commercial banks are included, then the deposit share will go up. Though the Islamic banks were permitted in the middle of the 1980s, the regulatory framework to oversee this activity and the conditions they were to fulfil with respect to compliance with the regulations were not there.

Shariah-compliant funds in Pakistan say the government’s plan to end a year-long hiatus in local sukuk sales is too little, too late to plug a shortage of assets that has put off their investors. The finance ministry will sell rupee-denominated sukuk once 233.8bn rupees ($2.2bn) of notes mature on November 21. That would be the first offering since it raised 49.5bn rupees in June last year. While Pakistan issued global bonds twice in the past 12 months, it has neglected local investors. A sovereign credit-rating upgrade in June, record foreign-exchange reserves and a narrowing current-account deficit make it an opportune moment to return to the Islamic debt market, after its conventional dollar bond sale in September drew bids for twice the $500mn offered.

While a number of mechanisms can be employed to structure a Sukuk transaction from a Shariah perspective, a Sukuk structure typically involves the acquisition of assets from the entity seeking to raise financing (the originator) by a limited recourse, bankruptcy-remote, SPV established in a tax neutral off shore jurisdiction. The Cayman Islands are, unquestionably, the off shore jurisdiction of choice for SPVs on Sukuk structures originating in the Middle East. The prevalence of Cayman SPVs in Sukuk structures stems from a number of factors: Trust regime in the Cayman Islands, Absence of tax, Ease, speed and cost of incorporation, Sophisticated off shore center for financial services, Reliable legal system, Use of Arabic names.

Property giant Ayala Land Inc. is looking at debuting at the Islamic financing market by issuing sukuk securities, to boost its fledgling venture into Malaysia’s property industry. ALI in April acquired 9.16 percent of Malaysian company GW Plastics Holdings Bhd. through a private placement amounting to $43 million or P1.9 billion. The Malaysian firm was later renamed MCT Bhd. ALI subsequently entered into a call option agreement with the two founders of the Malaysian firm, allowing it to increase its shares in MCT up to a maximum of 32.95 percent. To fund the entire investment, which needs to be accomplished in a month’s time, Ysmael said ALI is looking at the cheapest options available.

Saudi Arabia's Arab National Bank has issued SR2 billion ($533 million) of 10-year sukuk through a private placement, the kingdom's seventh largest lender by assets said in a bourse statement on Thursday. The bank has the right to call the sukuk after five years, it said. The yield was expected to be 140 basis points over the six-month Saudi interbank offered rate, the statement added. The proceeds of the issue will enhance the bank's capital in addition to allowing it to expand its activities through its Islamic window, the bank said.

Kuwait Finance House (KFH) participated as a primary dealer for short-term Sukuk issued by the International Islamic Liquidity Management IILM worth $1.85 billion. KFH is considered as the most active dealer in the market in terms of acquisition and volume traded. AbdulWahab Al-Roshoud, Acting Chief Treasury Officer at KFH, said that the average trading of IILM's previous three issuances in the secondary market surpassed 50 per cent of their volume which is considered high in comparison with the rest of Sukuk, indicating that this reflects the market’s strength and its contributions in increasing the liquidity. KFH forecasts that several local and global banks will participate in IILM’s upcoming Sukuk.

To expand its capital market, Oman will sell its first sovereign Islamic bond this week, the sultanate’s Ministry of Finance has announced. The country will open subscriptions for its first issue of sovereign sukuk on October 8 and close them on October 22. The rial-denominated issue will have a tenor of five years and will mature in 2020, with its profit rate set through a uniform price auction, according to the ministry. The issue will be open to sophisticated investors – usually taken to mean fund managers, banks and other institutions, as well as wealthy individuals – with a minimum subscription of OMR500,000 ($1.3 million).

Chinese property developer Country Garden Holdings Company Ltd plans to issue up to MYR1.5 billion ($340 million) of medium-term sukuk, through its Malaysian subsidiary, to finance the latter’s present and future investments. The issuer, Country Garden Real Estate Sdn Bhd, plans to commence marketing of the first tranche of medium term notes (MTN) to qualified investors. The MTN will not be offered to the general public and will not be listed on any securities exchange, Country Garden said. The mode of issuance, size and coupon rate of the proposed issue will be determined prior to distribution, and is subject to market conditions and investors’ interest. CIMB Investment Bank Berhad was appointed as the lead arranger and lead manager.

The Thomson Reuters Global Sukuk Index is at 118.10483 points, up from 117.98384 at the end of last month and 115.79726 at the end of last year. The Thomson Reuters Investment Grade Sukuk Index is at 116.80733 against 116.82783 at end-September and 113.69014 at end-2014. Some of the sukuk in the pipeline are: Oman will open subscriptions on Oct. 8 for its first sovereign issue of sukuk; the rial-denominated sukuk will have a tenor of five years, and the size of the issue will be decided on completion of a book-building exercise. Turkish Islamic bank Kuveyt Turk has picked seven banks to arrange a potential U.S. dollar-denominated sukuk issue. The Pakistani government plans an international sukuk issue, likely to be worth $500 million, next year.

The government is mulling to purchase near maturing Ijara Sukuk worth Rs233.81 billion from the Islamic banks on one year deferred payment term to squeeze surplus liquidity. It is expected to buy Rs233.81 billion Shariah-compliant paper, maturing on 21 November, as no investment option is available for Islamic banks to park their surplus funds of around Rs80-90 billion. The government will buy Ijara Sukuk having issues of GIS9, GIS10, GIS11, GIS12, and GIS13 using Islamic financial concept of Bai-muajjal via open market operation for one year. The Islamic banking institutions are flush with excess cash in the absence of no fresh Sukuk in the market.

Malaysian companies building railways and power plants under Prime Minister Datuk Seri Najib Razak’s US$444 billion (RM2 trillion) development programme will help revive sukuk sales from the slowest quarter since 2010. Corporate issuance could rise to as much as RM60 billion for the full year, said Mohd Effendi Abdullah, head of Islamic markets at Kuala Lumpur-based AmInvestment Bank. More Shariah-compliant bond sales are likely to be announced once the United States goes ahead with an expected interest-rate increase, removing an uncertainty that’s stifled issuance, said Effendi.

Malaysian companies building railways and power plants under Prime Minister Najib Razak’s $444 billion development program will help revive sukuk sales from the slowest quarter since 2010. Corporate issuance could rise to as much as 60 billion ringgit ($13.5 billion) for the full year, said Mohd. Effendi Abdullah, head of Islamic markets at Kuala Lumpur-based AmInvestment Bank. While the forecast would mark a pickup from the 31.5 billion ringgit sold so far this year, offerings would still remain below levels for the past three. Effendi said sukuk issuers that need the funds will still go ahead with sales even if market conditions are tough because they can structure longer-maturity debt to appeal to pension funds and insurers.

When Senegal issued a 100bn CFA franc ($168m) sovereign Islamic bond in June 2014, it beat economic giants Nigeria and South Africa to market and began a race to create a hub for Islamic finance in Africa. Senegalese officials are optimistic about the country's prospects. There is an Islamic bank in Senegal, the Banque Islamique du Sénégal. Alioune N'Diaye, the finance ministry's director for money and credit, also emphasized the good relationship with the Islamic Development Bank (IDB). With a gradual readjustment of tax and other laws to be able to accommodate sharia-compliant financial instruments and growing ties with Gulf states, Senegal could become a prime destination for Arab investors who are looking for higher returns on their money.

Unless Gulf bond sales pick up in the fourth quarter, the market will shrink this year for the first time in a decade. The prospects aren’t looking good. Issuance from the six-nation Gulf Cooperation Council dropped 31 per cent to $20.4 billion this year through 30 September, while $23.5 billion of securities are due to mature in 2015. Redemptions haven’t exceeded sales since at least 2005. A contraction would cap a year in which GCC debt investors have been starved of options as borrowers turned to loans and markets whipsawed amid China’s faltering economic performance and speculation the Federal Reserve will raise interest rates.

The Thomson Reuters Global Sukuk Index is at 118.31951 points, up from 117.69120 at the end of last month and 115.79726 at the end of last year. The Thomson Reuters Investment Grade Sukuk Index is at 117.20440 against 116.46023 at end-August and 113.69014 at end-2014. Some of the sukuk in the pipeline are: Turkish Islamic bank Kuveyt Turk has picked seven banks to arrange a potential U.S. dollar-denominated sukuk issue to bolster its supplementary or Tier 2 capital. The Pakistani government plans an international sukuk issue, likely to be worth $500 million, next year. Malaysia Building Society is finalising plans to offer up to 900 million ringgit ($214 million) in structured sukuk, probably later in the month.