IslamicFinance.de

Turkish Islamic bank Kuveyt Turk has picked seven banks to arrange a potential dollar-denominated sukuk to bolster its supplementary or Tier 2 capital. Kuveyt Turk Participation Bank, which is 62 percent owned by Kuwait Finance House, is planning to issue the sukuk after the Muslim festival of Eid al-Adha which begins this week. Kuveyt Turk has picked KFH Capital, Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD, HSBC, Noor Bank and QInvest to arrange investor roadshows ahead of the potential issue. The lender is expected to raise around $400 million.

Dubai's DAMAC Properties said on Tuesday that it raised $100 million through private placement of 18-month sukuk certificates. The certificates, rated BB by Standard & Poors, were issued by its unit Damac Real Estate Development Ltd, it said in a bourse statement. Emirates NBD was the sole lead manager for the transaction.

The Thomson Reuters Global Sukuk Index is at 117.85853 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 116.67619 against 116.46023 at end-August and 113.69014 at end-2014. Some of the sukuk in the pipeline are: Malaysia Building Society is finalising plans to offer up to 900 million ringgit ($214 million) in structured sukuk, probably later in the month. The Indonesian government plans to offer project-based sukuk worth 13.7 trillion rupiah ($953 million) next year. The financing arm of China's HNA Group, owner of Hainan Airlines, plans to make an offshore sukuk issue of benchmark size before year-end.

Fitch Ratings has affirmed the rating of The Goldman Sachs Group Inc.'s (GS) JANY Sukuk Company Limited (JANY) guaranteed trust certificate issuance programme at 'A'. The certificate programme's rating is equalized with GS's Issuer Default Rating (IDR) of 'A'. GSs ratings continue to be supported by its investment banking franchise, solid liquidity position, better-than-average capital position, and strong risk management. The ratings are constrained by GS's focus on capital market activities and relatively higher wholesale funding. The rating of the programme will be influenced by changes in GS's long-term IDR.

The International Finance Facility for Immunisation Co. (IFFIm) has hired banks for a return to the Islamic bonds market, a funding exercise that has helped add Muslim countries to the donor base of its immunisation programmes. This year, the governments of Saudi Arabia, Oman and Qatar have pledged to donate a combined $38 million to the Global Alliance for Vaccines and Immunisation (GAVI), the first Muslim nations to so. This follows the debut issuance of sukuk from IFFIm, which raised $500 million in November after attracting bids of $700 million. The second sukuk from IFFIm, for which the World Bank acts as treasury manager, has a three-year tenor and could raise $200 million to $250 million, said IFFIm Board Chair Rene Karsenti.

Bangladesh is a rare bird among developing nations: it benefits from a weakening Chinese yuan, is intervening to stop its currency gaining and is about to sell a debut Islamic bond in the quietest year for issuance since 2011. The nation is planning a $1bn note sale that may include a portion of Shariah-compliant notes anytime soon, central bank governor Atiur Rahman said. Only Hong Kong, Malaysia and Indonesia have issued global sukuk in Asia so far in 2015. Bangladesh Bank has sold $3.5bn of taka in the past year, boosting foreign-exchange reserves to a record $27bn, said Rahman.

Bambang Bodjonegoro, the Indonesian Minister of Finance, today rang the market-opening bell to celebrate the listing on Nasdaq Dubai of four Sukuk valued at six billion US dollars (AED 22 billion), issued by the Indonesian government under its Trust Certificate Issuance Programme since 2012. The Islamic bond listings are the largest ever carried out by a sovereign issuer in Dubai. Indonesia’s four Sukuk listings comprise one issuance of two billion USD dollars AED 7.3 billion), two of 1.5 billion US dollars (AED 5.5 billion) each, and one of one billion USD dollars (AED 3.7 billion). All listed on Nasdaq Dubai on May 31, 2015.

China’s Country Garden Holdings Co Ltd said it’s open to funding proposals from various domestic and international financial institutions, which include the possibility of setting up a sukuk programme and issuances to partly fund its proposed projects including the Forest City project in Johor. The company is reported to be interested in raising as much as RM800 million from a sukuk issuance. Forest City will be a mixed development project consists of commercial, residential, educational, healthcare centres and recreational facilities including man-made sandy beaches. The construction work on the project started in midMarch 2015.

Companies will need to pay more to borrow money through sukuk even as Malaysia, the global driver of Islamic finance, faces jitters amid a harsher economic environment and heightened political risk. Higher premiums would be necessary to attract investors and to provide investors with reasonable buffers against higher interest rates in the event US hikes its interest rates by year-end, said Meor Amri Meor Ayob, CEO of Bond Pricing Agency Malaysia. Aside from some domestic-specific uncertainties, the factors that are said to be affecting the Malaysian sukuk market — low oil prices, slower exports growth — are also similarly affecting other emerging markets and oil exporting countries.

The International Finance Corporation (IFC), a member of the World Bank Group, announced on September 10 that it issued a US$100 million trust certificates through a special purpose vehicle, IFC Sukuk Company, in an effort to spur growth in developing economies. The five-year Sukuk will support IFC’s developmental financing activities in the Middle East and North Africa (MENA), and other parts of the world. It will initially be listed on NASDAQ Dubai. An application has also been made to list the Sukuk on the London Stock Exchange. The sukuk were based on the al Wakala structure. Joint Lead Managers of the deal were Dubai Islamic Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank (B&D).

Egypt is planning to introduce sukuk and revisit the international capital market to help finance its $36bn financing gap during fiscal year (FY) 2015/2016, Minister of Finance Hany Kadry Dimian said. In June, the Egyptian government sold 10-year international bonds worth $1.5bn, with revenue of 6%. Dimian added that the best bet to bridge the financing gap is to continue reforming the economy. The Suez Canal Zone that was entirely a military zone now is opening to everyone, Dimian added. The oil sector is also opening up to new private investors, Dimian noted. Moreover, having a fully fledged VAT system will increase competitiveness, he added, highlighting that competitiveness will help stabilise the pound.

Oil and gas player SapuraKencana Petroleum Bhd has made its first issuance of US$200mil (RM845.8mil) sukuk under the multi-currency sukuk programme. The company said in a filing with Bursa Malaysia that its unit SapuraKencana TMC Sdn Bhd (SKTMC) will use the proceeds to refinance some existing debt. The sukuk offering is the first to be launched under the new Securities Commission Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework effective June 15, 2015. The company announced last week that SKTMC had signed the transaction documents for the inaugural multi-currency Islamic medium-term note.

The Thomson Reuters Global Sukuk Index is at 117.83027 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 116.41248 against 116.46023 at end-August and 113.69014 at end-2014. Sukuk in the pipeline include: SapuraKencana Petroleum, a Malaysian oil and gas services firm, said in early September it would launch a $200 million sukuk, to be issued on Sept. 8. Aluminium Bahrain is seeking a credit rating ahead of talks with banks about fund-raising for its $3.5 billion Line 6 expansion. A banking source said a bond or sukuk could be issued before end-2015 or early in 2016.

The Thomson Reuters Global Sukuk Index is at 117.83027 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 116.41248 against 116.46023 at end-August and 113.69014 at end-2014. Some of the sukuk in the pipeline are: SapuraKencana Petroleum, a Malaysian oil and gas services firm, said in early September it would launch a $200 million sukuk, to be issued on Sept. 8. State-owned public transport operator Prasarana Malaysia said in early September it would fund Malaysia's light rail transit three project via sukuk, with the coupon to be decided later. Turkiye Finans Katilim Bankasih has applied to raise up to 1.5 billion lira ($513 million) via sukuk.

Saudi Fransi Capital announces the successful closing of the SAR 1.0 billion five year Sukuk offering on behalf of Abdullah Al Othaim Real Estate Investment and Development Company "OREIDCO". The Sukuk (senior secured) has been issued through OREIDCO Sukuk Limited, by way of a private placement in the Kingdom of Saudi Arabia. OREIDCO Sukuk has attracted strong interest from the investors community in the Kingdom, with demand originating from government-owned funds, banks, asset managers, corporates and insurance companies. It was priced at 6-month SAIBOR + 1.7%. OREIDCO plans to use the Sukuk proceeds for meeting its requirements for capital investment and for general corporate purposes.

SapuraKencana Petroleum Bhd's share price rose this morning following its plan to launch a US$200 million (RM848.18 million) sukuk next week. The company's share gained two sen to RM1.79, as at 10.27 am, with 3.27 million shares changing hands. The first tranche of the sukuk, structured based on the Shariah principle of Commodity Murabahah, is scheduled to be launched on September 8, 2015. This is the first sukuk under the new Securities Commission's guidelines on Unlisted Capital Market Products under the lodge and launch framework effective from June 15, 2015.

In 2016 investors will be able to purchase about IDR 13.7 trillion (approx. USD $1.4 billion) worth of Islamic bonds to be issued by the Indonesian government. Indonesia will use proceeds from next year's bond sales to boost the nation’s infrastructure development. Government-led infrastructure development is regarded as key to overcome the current process of slowing economic growth that has been plaguing Indonesia since 2011. Demand for Islamic bonds may in fact be stronger than demand for conventional bonds. Indonesian sukuk is also less volatile compared to conventional bonds as investors tend to hold sukuk until maturity.

The Thomson Reuters Global Sukuk Index is at 117.69120 points, down from 118.20147 at the end of last month but up from 115.79726 at the end of last year. The Thomson Reuters Investment Grade Sukuk Index is at 116.46023 against 116.92144 at end-July and 113.69014 at end-2014. Some of the sukuk in the pipeline are: Malaysia's Tenaga Nasional Bhd said in late August it would raise up to 10 billion ringgit ($2.39 billion) with sukuk to build and operate a power plant project. International Finance Corp, a unit of the World Bank, planned to meet fixed income investors from Aug. 31 ahead of a potential issue of U.S. dollar-denominated sukuk. Aluminium Bahrain is seeking a credit rating ahead of talks with banks about fund-raising.

Turkish Islamic lenders Turkiye Finans Katilim Bankasi and Albaraka Turk have applied separately to issue Islamic bonds, according to Turkey's Capital Markets Board. Turkiye Finans has applied to raise up to 1.5 billion lira ($513.2 million) through its wholly-owned unit, TF Varlik Kiralama. No tenor or details of underlying assets were given for the deal, which could be sold as a public offering or to qualified investors. Albaraka Turk, a unit of Bahrain-based Al Baraka Banking Group, has also applied to raise up to 1 billion lira through its asset-leasing company, Bereket Varlik Kiralama. The bulk of sukuk issuance in Turkey has come from the government and the country's Islamic banks, although corporate issuance is also growing.

Dollar sukuk returns are turning into losses in Asia’s biggest Islamic finance markets as confidence in government leaders sours amid a regional sell off. Indonesia’s Shariah-compliant sovereign bonds due in 2024 have dropped 3.8% since April and the 2025 Malaysian debt lost 2.6%, compared with a 2.4% decline in a Bloomberg index of emerging-market conventional government notes. In that period, the rupiah plunged 6.4%, and the ringgit 13%. Both countries are grappling with an economic slowdown, falling commodity-export prices and capital outflows as the US prepares to raise interest rates. The reality is, investors have had to resign themselves to stagnant growth, so they were let down after buying into the story.