IslamicFinance.de

The Kuwait Finance House (KFH) through its subsidiary 'KFH Investment' has successfully managed to lead a USD 500 million issuance for Sharjah Islamic Bank (SIB) to finance expansion and growth plans. The Sukuk issue is 5 years Wakala/Mudharabah Sukuk deal which has received an over subscription almost 7 times the targeted size. The issue has attracted a USD 3.6 billion order books by 120 various accounts or investors. Geographical distribution shows that 63 percent of orders came from the GCC and the Middle East, 23 percent from Asia and 14 percent from Europe.KFH has acted as a Joint Lead Manager and Bookrunner.

The Asian Development Bank (ADB) is stepping up efforts to assist member countries to use Islamic finance in areas such as infrastructure financing, ranging from technical assistance to providing credit guarantees. The Manila-based development lender sees Islamic finance as complementing its objectives to boost financial inclusion and promote financial stability. ADB had considered making a sukuk issuance of its own, but the focus is now on supporting member states’ use of sukuk for their public debt financing. AAA-rated ADB is also considering partial guarantees to boost the credit rating of sukuk from sovereign issuers.

Nigeria and Ivory Coast have begun negotiations with the Islamic Corporation for the Development of the Private Sector (ICD) for sukuk issuance. According to the ICD head Khaled Al-Aboodi, the two countries are looking to emulate Senegal’s successful move into the market for Islamic bonds. Al-Aboodi added that they were exploring with Nigeria and Ivory Coast. The issuance by Senegal has opened up the whole region, he said. The ICD hopes to support at least two countries in 2015 to issue a sukuk. Meanwhile, Niger has signed up for a sukuk programme worth 150 billion CFA francs ($260 million), although the timing has yet to be determined.

Turkey's Capital Markets Board has approved issuance of ringgit-denominated Islamic bonds by Turkiye Finans Katilim Bankasi and a debut lira-denominated deal by Zorlu Energy. Islamic lender Turkiye Finans will raise up to 2.05 billion ringgit ($553.7 million) via sukuk, issued by its wholly-owned unit TF Varlik Kiralama. Separately, Zorlu Energy received approval to raise 100 million lira ($38.4 million) via sukuk. So far the bulk of sukuk issuance has come from the government and the country's four Islamic banks. Islamic lender Kuveyt Turk also plans to issue a debut sukuk in the Malaysian market, through a 2 billion ringgit programme.

Bank Muscat's shareholders have approved the Board's recommendation for the setting up of a RO 500 million (or its equivalent in US Dollar currency) Meethaq Sukuk Programme for the issuance of sukuk in various tranches in the domestic and international markets through public subscription or private placement. The Sukuk tranches under the Meethaq Sukuk Programme will be in different amounts, maturities, and profit rates, issued on different dates with varying terms and conditions of subscription. All Sukuk will be issued within five years. Approval was also given to the Board's recommendations to issue convertible bonds.

Chief Executive of Islamic Corporation for the Development of the Private Sector (ICD), Khaled Al-Aboodi, says Nigeria and Ivory Coast are looking to emulate Senegal's successful move into the market for sukuk. Senegal, meanwhile, is discussing another sukuk after the ICD helped it arranged its debut $208 million Islamic bond last June. Nigeria's neighbour Niger has signed up for a sukuk programme worth 150 billion CFA francs ($260 million), although the timing has yet to be determined. Al-Aboodi said they hoped to issue the sukuk before the end of the year, adding that the tenor depended on its structure and investor appetite.

The Japan International Cooperation Agency (JICA) and the government of Jordan will begin work in the coming weeks on a debut issuance of Islamic bonds. In October, JICA signed an agreement with the Islamic Corporation for the Development of the Private Sector (ICD), to develop its Islamic finance capability. Jordan is JICA's first target. JICA and ICD will start their joint technical assistance to the country within a month, Tetsutaro Kon, director in charge of Middle East operations at JICA, said. The consultation would continue over the next six months and address details such as currency and tenor of the sukuk.

The emirate of Ras Al-Khaimah has hired four banks to arrange fixed income investor meetings starting on Thursday for a potential US dollar-denominated sukuk offer, a document from lead arrangers showed. Ras Al-Khaimah has picked Al Hilal Bank, Citigroup, JP Morgan and National Bank of Abu Dhabi to arrange investor meetings in Asia, the Middle East and Europe, the document showed. Investor meetings will start in Singapore on Thursday, before moving to Kuala Lumpur on Friday, the UAE on Sunday and London on Monday.

Qatar International Islamic Bank (QIIB) held its Ordinary General Assembly Meetings on 15 March. Among the agenda items approved, approval was given to the Board recommendation to issue Additional Tier 1 Sukuk non-convertible into ordinary shares up to QAR 3.0 billion. The Board was delegated powers to decide the size of each issuance, terms and conditions, issuance currency after getting all necessary approvals from supervisory authorities. The meetings also approved the proposal to pay 40 per cent of the bank capital as cash dividends, equivalent to QAR 4.0 per share.

Qatar’s Masraf Al Rayan is eyeing a debut in the debt capital markets this year after inviting bankers to pitch for arranger roles on a potential U.S. dollar-denominated benchmark sukuk issue, sources said on Monday. The sharia-compliant institution is expected to raise funds before end-April. Masraf Al Rayan is “very close” to mandating arrangers for the upcoming sukuk issue, two sources said. Masraf Al Rayan joins a growing pipeline of potential Gulf issuance as borrowers want to obtain funds from the dollar debt markets before a possible increase in interest rates by the U.S. Federal Reserve later this year.

The Thomson Reuters Global Sukuk Index is at 117.18655 points, down from 117.49811 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 115.91606 against 115.48693 at the end of February and 113.69014 at end-2014. Sukuk in the pipeline include: Malaysia has hired three banks to manage the issuance of sovereign sukuk worth up to $2 billion. The emirate of Ras al-Khaimah picked four banks to arrange investor meetings for a potential US. dollar-denominated sukuk issue of benchmark size. Oman Telecommunications will seek shareholder approval on March 22 for a debut issue of sukuk; no size or time frame was given.

Mubadala GE Capital is considering a return to the bond market as early as April as it seeks cash to fuel its lending business. The joint venture between the Abu Dhabi state-owned fund and General Electric provides commercial lending, equipment leasing, distribution and vendor finance solutions among other services. Rated Baa2/A by Moody's and Fitch respectively, Mubadala GE Capital has yet to appoint banks to arrange the bond, which will be of benchmark size. It is likely to pick arrangers from the group of banks which lent $750 million to the company in December 2013. The sukuk will probably be part of a regular programme.

The structure of Sukuk through the creation of Special Purpose Vehicles (SPVs) provides better transparency thereby reducing corruption and wastage as productive assets must be put to work in order to generate rental incomes for investors, rather than disappearing into offshore banking centres or participating in deliberately over priced projects. In its annual report, Transparency International ranks countries based on expert opinions of public sector corruption. Increased transparency can be used to inspire investor confidence and trust thus leading to increased foreign direct investment.

Despite the green bond issuance market increasing more than threefold to US$36bn last year on 2013, according to the Climate Bond Initiative (CBI), the UAE is still uncharted territory. However, the race is on to release the world’s first green sukuk, and this country is looking like a strong contender for the first issuer of a green sukuk. Instead of hitting the conventional bond buyers, a green sukuk can attract conventional bond investors to those diversifying their portfolios. All it would take is one issuer to come out in the region to show the demand.

The UAE is expected to issue the world’s first Sharia-compliant bond aimed at financing green energy projects this year, possibly as early as next month. Green bond issuance reached US$36.6 billion globally last year, more than triple the previous year’s total. $100bn of green bond issuance is expected this year. The London-based Climate Bonds Initiative (CBI) has helped to create international standards for this type of ethically responsible financial security, from which capital raised is used for projects such as solar and wind schemes as well as developing energy efficiency initiatives such as LED lighting.

Petronas has announced price guidance levels for an offering of US dollar bonds, which includes a sukuk tranche. The senior unsecured notes of seven, 10 and 30 years have been announced to yield around 150bp, 175bp and 220bp over US Treasuries, respectively. The sukuk of five years is being offered at a yield of around 135bp over US Treasuries and be in a Wakalah structure. The 144A/Reg S senior unsecured notes are expected to be rated on par with the company at A1/A- (Moody's/S&P). Bank of America Merrill Lynch, CIMB, Citigroup, JP Morgan and Morgan Stanley are the active joint bookrunners. Deutsche Bank, HSBC, Maybank and MUFG are passive bookrunners.

Sharjah Islamic Bank (SIB) priced a $500 million sukuk of five years duration on Tuesday. The Islamic bond was priced at a spread of 110 basis points over midswaps and carried a profit rate of 2.843 per cent. The final spread was at the tight end of price guidance issued earlier in the day of 115 bps, plus or minus 5 bps, over the benchmark. The order book was worth around $3 billion. SIB’s sukuk was arranged by Noor Bank, Abu Dhabi Islamic Bank, Al Hilal Bank, Dubai Islamic Bank, Emirates NBD, HSBC, KFH Investment and Standard Chartered and was sold after a series of investor meetings in Asia and Europe.

The Thomson Reuters Global Sukuk Index is at 117.39361 points, down from 117.49811 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 115.67036 against 115.48693 at the end of February and 113.69014 at end-2014. Sukuk in the pipeline include the following: Telekom Malaysia will set up a $750 million multi-currency sukuk programme to diversify its funding avenues and enhance its flexibility to raise capital. The emirate of Ras al-Khaimah has invited bankers to pitch for arranger roles on a potential U.S. dollar-denominated benchmark sukuk issue, the deal is expected before end-April.

The Islamic Development Bank (IDB), rated Aaa/AAA/AAA by Moody's, S&P and Fitch (all stable outlook), has successfully priced $1 billion, 5-year, trust certificates (sukuk) issued at par with a 1.83 percent semi-annual profit rate under its $10 billion trust certificate issuance program. Despite an uncertain market environment, IDB achieved extremely attractive pricing, with the deal pricing approximately 22bps inside the secondary market levels. The trust certificates will be listed on the London Stock Exchange, Nasdaq Dubai and Bursa Malaysia under an exempt regime.

Standard & Poor's Ratings Services has assigned its preliminary 'A-' issue rating to the proposed US-dollar-denominated Wakala trust certificates to be issued by Petronas Global Sukuk Ltd. Petronas Global Sukuk - a special-purpose company incorporated in Labuan for issuing sukuk trust certificates - will enter into a "Wakala" agreement with national oil corporation Petroliam Nasional Bhd. Under this agreement, the issuer will enter into an Ijara for at least 33 per cent of the issued amount and a Murabaha for at most 67 per cent of the issued amount with Petronas. S&P assesses remote the risks that a total loss event jeopardises the full and timely repayments of the trust certificates.