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South Africa has announced a tenor of 5.75 years for its inaugural sukuk, which is expected to price later this week. Initial profit thoughts on the U.S. dollar benchmark-sized Islamic bond, which matures in June 2020, will be released early this week. South Africa finished investor meetings for the 144A/Reg S deal last Friday. The sovereign is rated Baa1 by Moody's, BBB- by Standard & Poor's and BBB by Fitch. BNP Paribas, KFH Investment and Standard Bank are the lead managers.

The Securities and Commodities Authority (SCA) has issued a new set of regulations for the bonds and sukuk market cutting the minimum value of issuance from Dh50 million to Dh10 million. The regulations include a shortened approval time of five days, and the removal of the requirement to obtain a credit rating. Additionally, bond issuers are no longer required to provide a quarterly report as they may only provide an audited annual financial statement within 180 days of the year-end. The new set of regulations aims to give momentum to the market, and strengthen the UAE’s role as a financial hub for global Islamic economy. However, the regulations do not apply to government entities and companies wholly owned by the government.

Goldman Sachs has set initial price thoughts in the 95 basis points area over midswaps for its debut five-year, benchmark-sized U.S. dollar Islamic bond issue. The investment bank finished two days of investor meetings in the Middle East on Sept. 11. Goldman picked itself, Abu Dhabi Islamic Bank, Emirates NBD, National Bank of Abu Dhabi, QInvest and IPO-NACO.SE to arrange the investor meetings. The sukuk is being issued through a vehicle called JANY Sukuk Co and will be guaranteed by Goldman Sachs. The issue is expected to be rated A-minus by Standard & Poor's and A by Fitch Ratings, identical to the ratings of the investment bank. It will be listed on the Luxembourg Stock Exchange.

Kuwait Financial Centre ‘Markaz’, in its recent research report GCC Bonds & Sukuk Market Survey, reports aggregate primary issuance of bonds and sukuk in the GCC totaled $56.71 billion in H1 2014, a 24.71 per cent increase from the total amount raised in H1 2013. June was the most active month in terms of both the amount raised and the number of issuances. A total of $15.55 billion was raised during the month through 44 issues. The GCC bond and Sukuk market in H1 2014 was dominated by the US Dollar denominated issuances: a total of $14.06 billion was raised, representing 57.2 per cent of the total amount.

Islamic bond programmes from a trio of big conventional banks are set to expand the boundaries of Islamic finance, helping open the market to first-time issuers while testing the banks' ability to win over industry purists. Since June, France's Societe Generale, Bank of Tokyo-Mitsubishi UFJ (BTMU) and Goldman Sachs have set up sukuk programmes, aiming to tap the pool of cash-rich Islamic investors. An abortive plan by Goldman to issue sukuk in 2011 showed the obstacles which conventional banks can face in the market. But if the three banks are successful and become regular sukuk issuers, they could help to widen Islamic finance beyond its core markets in the Middle East and southeast Asia.

Islamic bond programmes from a trio of big conventional banks are set to expand the boundaries of Islamic finance, helping open the market to first-time issuers while testing the banks' ability to win over industry purists. Since June, France's Societe Generale, Bank of Tokyo-Mitsubishi UFJ (BTMU) and Goldman Sachs have set up sukuk programmes, aiming to tap the pool of cash-rich Islamic investors. They are treading a fine line, having to reconcile the fact that their businesses mostly depend on conventional banking practices. If the three banks are successful and become regular sukuk issuers, they could help to widen Islamic finance beyond its core markets in the Middle East and southeast Asia.

Kuwait Finance House Investment Company (KFH-Investment) has participated in arranging USD 750 mln debut sukuk for the emirate of Sharjah. Emad Al Monayea, Board Director and Chief Executive Officer, KFH-Investment stated that the sukuk witnessed 10-time oversubscription where order book was about USD7.85 billion from 250 accounts. He added that the government plans to continue to use borrowing to fund priority capital investment. He explained that rating agencies Moody’s and S&Ps assigned sukuk A and A3 ratings supported by the stable future outlook. Talking about the allocation of the debut sukuk, he said that Middle East is 50 per cent, UK 20 per cent, rest of Europe 11 per cent, Asia 14 per cent and others five per cent.

The International Finance Facility for Immunisation Co. (IFFI), for which the World Bank acts as treasury manager, has picked four banks for a potential U.S. dollar-denominated sukuk. Rated AA by Standard and Poor's and AA+ by Fitch, IFFI has mandated Qatar's Barwa Bank, National Bank of Abu Dhabi, and Standard Chartered to arrange investor meetings in the Middle East, Europe and Asia. A potential sukuk offer may follow the roadshows - for which a schedule has not been given - subject to market conditions before the end of the year.

Until recently, Islamic finance in Africa had held more promise than progress, but that is changing. African governments are looking to sharia-compliant financial markets to attract investment from the Middle East. The Senegalese government closed on a 100bn CFA franc ($208m) sukuk on 18 July, and South Africa plans to launch its first sovereign sukuk this year. It could be valued at up to $700m. Money from the Middle East is also coming in the form of development finance. The Islamic Development Bank said in June that it is devoting $180m to renewable energy projects in Africa and plans to provide $7bn in finance to African countries by 2019.

Hong Kong sold US$1 billion (RM3.19 billion) of sovereign Islamic bonds in its first-ever issue of the securities, attracting orders for 4.7 times the amount on offer. The dollar-denominated five-year notes were priced at a 2.005 per cent profit rate. The United Kingdom, which along with Hong Kong is rated the highest investment grade, sold sukuk for the first time in June at a coupon of 2.036 per cent. Those notes yielded 1.76 per cent yesterday. The Hong Kong sukuk was priced at 23 basis points above similar-maturity US Treasuries, the narrowest spread ever achieved on a benchmark dollar issuance from an Asian government outside Japan. The city has changed its tax laws to help pave the way for sales of syariah-compliant debt.

The Bank of Tokyo-Mitsubishi UFJ (BTMU) hopes to expand its Islamic finance business across Asia and the Gulf, buoyed by a landmark multi-currency sukuk programme set up in Malaysia. BTMU, part of the Mitsubishi UFJ Financial Group, set up its sukuk programme in June. The programme will allow its wholly-owned Malaysian unit, BTMU Malaysia Berhard, to raise the equivalent of $500 million via sukuk with tenors of up to 10 years. It provides an alternative funding source for BTMU Malaysia to manage its liquidity to match increasing and growing exposures in multi-currency sharia-compliant financing. No timeframe was given for the first transaction, although the bank is increasingly active in the Islamic capital market.

Aktif Bank has received regulatory approval to issue 200 million lira ($91 million) in Islamic bonds. The lender will sell the sukuk to qualified investors through its asset leasing company, Aktif Bank Sukuk Varlk Kiralama. It gave no time frame for the deal. Last year, Aktif Bank helped raise a small one-year 100 million lira sukuk for construction-to-energy firm Agaoglu Group using a mudaraba structure. Besides, Turkish conglomerate Dogus Group received regulatory approval last month to raise $370 million via sukuk in what would be the first dollar-denominated corporate transaction of the kind in the country. The Capital Markets Board has outlined new regulations to allow a wider range of sukuk structures.

Gulf emirate Sharjah launched its first sovereign sukuk on Wednesday, a 10-year, 750-million-US-dollar Islamic bond with a 3.764 percent yield. Following a press conference in Sharjah on Wednesday to announce the issue, the government said the bond had been more than 10 times oversubscribed, drawing in 7.85 billion dollars in orders from 250 investors. Regional investors accounted for 50 percent of these, with British investors accounting for 20 percent, other European investors 11 percent, and those from Asia 14 percent. The bond was originally priced at 100 basis points over midswaps, but this was later tightened to 120 points in response to the high demand, before the government finally decided on 110 points. The bond will now be traded on the Nasdaq Dubai exchange and the Irish Stock Exchange.

Sharjah has announced initial price guidance of 120bp area over mid-swaps for a US dollar benchmark-sized 10-year sukuk. That follows initial price thoughts of low-mid 100s over mid-swaps, released earlier on Tuesday. Demand for the bond, which is expected to price on Wednesday, is more than US$4bn. HSBC, KFH Investment, National Bank of Abu Dhabi, Sharjah Islamic Bank and Standard Chartered are the lead managers on the Reg S sukuk.

The global primary market volume has reached USD80.35 billion in eight months ended August 2014 (8M14), 6.8 percent higher than the USD75.23bln volume in 8M13, Kuwait Finance House said in its monthly sukuk report. A strong pipeline waits in the remaining months of 2014 including debut sovereign issuances by the AAA-rated jurisdictions of Luxembourg and Hong Kong. KFH also stated that global primary sukuk market activity remained moderate in the month of August as a total of USD7.54 billion worth of new sukuk were issued. Analyzing by the country of sukuk origination, the report disclosed that the primary market activity was heavily concentrated in Malaysia.

As the hard currency denominated sukuk issuance gains momentum, analysts expect more new Islamic and non-Islamic sovereign issuers to enter the market. Since 2001, governments of South Africa and Sharjah, and at least eight other governments - Luxembourg, Morocco, Tunisia, Egypt, Jordan, Oman, Bangladesh and Kenya - have expressed firm intentions and are likely to issue sukuk in the next two years. The United Kingdom issued its inaugural sukuk, while Hong Kong and South Africa are expected to conclude sales in September 2014. Various other countries such as Australia, the Philippines, South Korea, Russia and Azerbaijan have shown moderate interest in the sector.

Corporate and infrastructure Sukuk issuance is likely to rise over the next few years, despite the dip in issues over the past eight months compared to the same period of 2013, says Standard & Poor's Ratings Services in its new report 'Why Corporate And Infrastructure Sukuk Issuance Is Declining, Despite Healthy Prospects'. S&P attributes the decline in corporate and infrastructure Sukuk in large part to cheap and ample bank liquidity, which has made issuers less reliant on the capital markets. The overall small pool of Sukuk issuers, and seasonal factors have also played a role. Nevertheless, corporate and infrastructure Sukuk issuance is expected to increase again over the next few years as companies' refinancing needs grow and entities establish themselves as Sukuk issuers.

The International Financial Facility for Immunization seeks to sell as much as $500 million of dollar-denominated Shariah-compliant notes, using the bond proceeds to supply vaccines to some of the world’s poorest nations. IFFIM, a non-profit organization based in London, will sell the three-year vaccine bonds backed by commodities as early as this month. The sukuk will be of the Murabaha type and are rated AA by Standard & Poor’s. Ethical or green sukuk aren’t governed by any industry standards and don’t need a separate endorsement from an Islamic scholar. Issuance of green sukuk is expected to rise as there is growing awareness of environmental preservation.

Goldman Sachs Group Inc. (GS) will probably succeed in its latest attempt to sell sukuk as investors clamor for Islamic bonds. GS will meet investors in the region this week before potentially selling a dollar-denominated, benchmark-sized issue through its unit JANY Sukuk Co. The New York-based lender’s first foray into the Islamic capital markets three years ago ended without a sale amid criticism from scholars about the structure of its sukuk program and the use of funds raised. This time the planned security will be a Sukuk al Wakala. Goldman Sachs along with Abu Dhabi Islamic Bank PJSC, National Bank of Abu Dhabi PJSC, Emirates NBD Capital Ltd. and NCB Capital will manage the new offering.

Volumes of sovereign sukuk have increased significantly over the last three years as governments in Asia, the Gulf Cooperation Council (GCC), Europe and now Africa seek to tap increased demand for Sharia-compliant financial assets. However a large portion of these issuance is denominated in local currencies, according to Moody’s. In the medium term, these international issuances will remain driven by sovereign and government-related issuers from the GCC countries because of their US dollar currency pegs. According to Moody’s estimates global sukuk issuance this year will exceed the 2013 level to reach around $70 billion, with sovereign issuance increasing to around $30 billion this year.