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South Africa said it appointed BNP Paribas SA, KFH Investment and Standard Bank Group Ltd. to arrange a debut sukuk sale of at least $500 million. Investor meetings will reportedly run from Sept. 8 to Sept. 12 in Europe, Asia and the Middle East. A sukuk issue may follow but the timing will depend on market conditions. South Africa is looking to issue a benchmark-size sukuk. Former South African Finance Minister Pravin Gordhan earmarked $1.5 billion of foreign issuance over this and the next two fiscal years in his February budget, including a sukuk of as much as $500 million. Standard & Poor’s cut South Africa’s rating to BBB-, on par with Russia and Brazil, in June, with a stable outlook. Fitch Ratings has a negative outlook on its BBB assessment, the second-lowest investment grade.

Hong Kong's government will hold investor meetings next week for its maiden Islamic bond issue. A meeting will be held in Hong Kong on Monday before one in Singapore on Tuesday, Kuala Lumpur on Wednesday and meetings in Dubai, Doha, Abu Dhabi and London on Thursday. The AAA-rated government earlier mandated HSBC, Standard Chartered, CIMB Group Holdings and National Bank of Abu Dhabi to arrange the issue. The sukuk ijara issue is expected to be listed on the Hong Kong, Malaysia and Dubai bourses. The sukuk is expected to be denominated in U.S. dollars and have a tenor of five years. Officials have previously said issuance size is expected to be about US$500 million to US$1 billion.

Chief Executive of Bank of London and the Middle East, Humphrey Percy expects the sukuk market issuance to grow and that will be underpinned by new sovereigns. He is not only referring to the U.K.’s maiden sukuk but also potential new Islamic bond sales by Luxembourg, South Africa and Hong Kong. Mr. Percy argues that demand for high-quality sukuk is on the rise because under ever more stringent banking regulations those investments can be treated as part of the lenders’ mandatory liquid assets buffers. In addition, as global interest rates could go up, entities would be more compelled to consider selling sukuk, Mr. Percy said. And the more sukuk issuance from relative newcomers outside the traditional markets, the better for the overall development of the industry, Mr. Percy noted.

CIMB Islamic, the shariah-compliant unit of Malaysia's second largest bank, is preparing an Islamic bond programme to raise up to RM5 billion ($1.58 billion). The Basel III compliant sukuk programme, assigned a preliminary rating of AA+ by ratings agency MARC, will go towards replacing an existing RM2 billion Tier-2 sukuk and to fund working capital. The securities commission is still finalising approval and CIMB is not expected to issue sukuk from the programme any time soon. The company did not specify the range of maturities or sizes for sukuk under the programme. CIMB is currently in talks with two smaller banks to create a mega-Islamic bank.

Malaysian property developer Sunway will raise up to 2 billion ringgit ($633 million) by issuing sukuk mudharaba, it said in August; short-term commercial paper under the programme will have maturities of between a month and a year, while medium-term notes will have maturities of one to seven years. Sunway will make its first issuance within two years. Turkey's Treasury said it plans to issue lira-denominated sukuk worth 1.5 billion lira ($705 million) in October. Tunisia will sell its first sovereign Islamic bond in September after months of delays, raising $140 million. The Islamic Development Bank plans to issue a benchmark-sized sukuk around May next year, close in size to a $1.5 billion, five-year sukuk which it issued in February this year, among others.

Indonesia is about to get an annual scorecard from Islamic bond investors and the signs are good. The nation’s first dollar sukuk in a year may yield 3.8 percent to 4.5 percent if the tenor is 10 years. That’s less than the 6.125 percent on 2019 global Islamic notes sold last September. Bank Indonesia has added $18 billion to currency reserves over the past year, inflation has almost halved from January and bond risk fell as Joko Widodo fended off legal challenges to his victory in July’s presidential election. Demand for Indonesia’s sukuk will be buoyed by a shortage of global Shariah-compliant securities. The nation’s dollar sukuk due November 2022 returned 17 percent this year, outpacing gains of 9.2 percent and 12 percent for similar notes from Malaysia and Dubai.

slamic banks in the Gulf and elsewhere could increase their issuance of Additional Tier 1 sukuk over the next two years to support growth, according to an analyst at Standard & Poor’s. Gulf nations including Saudi Arabia, Kuwait, Qatar and the UAE are at different stages of implementing Basel III guidelines, giving Islamic banks an additional incentive to strengthen their capital buffers. Most Islamic banks are well capitalised, but there are still compelling reasons to issue capital in the near future, according to S&P. Several bonds have already been issued that the issuers said were compliant with Basel III regulations. One of the key recommendations is that any instrument must contain elements of loss absorption to comply with Basel III.

The Turkish regulator Capital Markets Board (SPK) said it won’t consider Bank Asya’s (ASYAB) application to sell 140 million liras ($65 million) in debt, dealing another blow to the suspended Istanbul-based lender. It cited ambiguity over ownership. The shares have been on hold since Aug. 7, after large swings on contradictory government statements about a possible state purchase. Bank Asya was subsequently suspended from trading on the Istanbul exchange and removed from the main indexes. Regulators have also revoked the bank’s right to collect tax on behalf of the government. The bank said it applied to sell the debt in March. Bank Asya shares declined 14 percent this year before being suspended. That compares with a 20 percent gain on the Turkish banking index this year.

Malaysia-based International Islamic Liquidity Management Corp (IILM) will raise $790 million through its Islamic bond programme next week, according to a filing with the central bank. The IILM, a consortium of central banks from Asia, the Middle East and Africa, will auction a three-month $390 million sukuk and a six-month $400 million sukuk on Monday Aug. 25. IILM last went to the market in July to re-issue $860 million worth of three-month papers, in order to meet a shortage of highly liquid, investment-grade financial instruments which Islamic banks can trade to manage their short-term funding needs.

More Islamic banks are expected to issue sukuks eligible for Additional Tier (AT1) capital over the next two years as countries start to implement Basel III, according to Standard & Poor's Ratings Services. Over the past two years, there have been Tier 1 sukuk issuances from three UAE Islamic banks that reportedly qualify as Additional Tier 1 (AT1) capital under Basel III. The oversubscription rates of these three Tier 1 sukuk and their tight pricing suggest a very strong market appetite, which S&P expects to linger unless market conditions shift over the next few months. The introduction of a liquidity coverage ratio might address some of the industry's long-standing weaknesses, particularly the lack of high quality liquid assets.

Khazanah Nasional Bhd., Malaysia’s state-owned investment fund, has sold 1.5 billion ringgit ($476 million) of Islamic bonds. The firm priced the five-year debt to yield 4.14 percent, within its earlier guidance of 4.1 percent to 4.18 percent. The issuance is part of a 7 billion ringgit program to raise funds for corporate purposes. Khazanah will issue the new debt via its unit Rantau Abang Capital Bhd. It’s the second time this year that the company has tapped the ringgit sukuk market after selling 15-year securities in March at a coupon of 5.2 percent. Khazanah is in the process of buying up the 30.6 percent stake in Malaysian Airline System that it doesn’t already own.

A blueprint being drawn up for Indonesia’s Islamic finance industry may include incentives to help revive the domestic market for sukuk. Indonesia’s financial services authority, Otoritas Jasa Keuangan (OJK), is preparing a five-year plan for the sector to help it expand. The document is expected to be ready for public consultation by year-end, and will address issues including a lack of scale in the industry, sector consolidation and the role of foreign ownership. The regulator is also exploring ways to revive a sukuk market, which has seen no corporate issuers so far this year. The reasons for the drop-off in activity are not clear, but may be related to higher costs involved in issuing sukuk, a lack of experience among arranging banks, or a lack of regulatory clarity.

Investors treat a company’s shares differently depending on the specific types of Islamic bond it issues and the reputation of the Islamic scholars who oversee the instruments, a study by the International Monetary Fund found. About a dozen types of sukuk are in use worldwide. The study found the ijara structure tended to draw a positive reaction from the stock market, with the shares of companies using that structure performing relatively well. By contrast, equity-based structures such as musharaka met a relatively negative reaction. The IMF also looked at other characteristics of sukuk such as their tenors and pricing, but did not find these factors to be statistically significant for the responses of equity market investors.

DIFC Investments, the investment arm of the company running Dubai’s financial free zone, is reportedly planning to issue sukuk. The company has appointed banks and could come to market as early as September. Key banks on a 2012 loan deal are among those involved in the new sukuk. DIFC took out a $1 billion syndicated loan in May 2012 with Emirates NBD acting as financial adviser, while Standard Chartered coordinated the debt. Dubai Islamic Bank and Noor Bank also participated in the loan. The purpose of that loan was to refinance a $1.2 billion FRN sukuk that was maturing later that year. The new sukuk, if successful, could be used to refinance that 2012 loan.

A shortage of global sukuk will probably help cut borrowing costs on Pakistan’s first Islamic bonds since 2005, boosting a government besieged by opposition street protests. The government plans to offer $1 billion of the notes, with the sale scheduled for the first week of September. Assuming it’s a five-year maturity, the coupon rate will probably be 5.75 percent to 6.25 percent. The nation paid 7.25 percent for 2019 non-Islamic dollar debt in April. This deal will be an important test to see how a politically volatile country, as Pakistan is at the moment, can issue a high-yield sukuk. There will be demand because no other country is giving this huge return. The rupee has rebounded 9.3 percent from a record-low of 108.70 per dollar on Dec. 3. It closed at 99.49 yesterday.

Bahrain-based Gulf Finance House plans to list its upcoming $200 million (Dh734 million) sukuk on Nasdaq Dubai. The company said in a statement to Dubai Financial Market that it has signed a Memorandum of Understanding with the Dubai bourse to list the Islamic bond. GFH said it plans to use the proceeds from the sukuk to repay current outstanding sukuk of $84 million and undertake business acquisitions for financial consolidation and project development in Bahrain and Dubai. The $200 million sukuk will take place in the coming months and a date will be announced later after the approval by the regulatory authorities.

Le cabinet d’avocats d’affaires international Clifford Chance conseille la République du Sénégal sur sa première émission de Sukuk de 100 milliards de francs CFA (environ 200 millions de dollars US). Il s’agit de la première émission souveraine de Sukuk importante réalisée en Afrique. Le Sukuk a été structuré sous forme d’Ijara. La République du Sénégal a accordé un usufruit de 99 ans sur certains de ses actifs et a décidé de les louer en retour pour effectuer des paiements de loyers aux investisseurs. L’opération a été garantie par la République du Sénégal. Les arrangeurs de cette opération sont la Société islamique pour le développement du secteur privé et Citi.

Hong Kong, Indonesia and Pakistan are banking on pent-up investor demand as they look to raise up to a combined US$3.5bn in the fast-growing Islamic bond market. The three sovereign sukuk issues, including a planned US$1bn debut from Triple A rated Hong Kong, are set to launch before the end of September. Indonesia is Asia’s only regular in the global sukuk market, having issued annually since 2010. Pakistan has sold Islamic debt overseas only once before, in 2005, while Malaysia has typically preferred to target its own domestic market. Hong Kong, in particular, is looking to promote itself as a regional hub for Islamic financing to capitalise on growing trade links between Greater China and the Middle East.

Countries including Pakistan, Tunisia and South Africa are drawing up plans to issue government bonds that comply with Islamic law as they seek to take advantage of strong investor demand for emerging market sovereign debt. Tunisia is working with the Islamic Development Bank to issue a 1bn dinar ($580m) sukuk this year, while Jordan has instructed a committee to look into the possibility of issuing sukuk next year. Governments in South Africa and the Philippines also say they are considering raising money through the sale of Islamic debt.

Luxembourg will start meeting investors in the next two months to drum up support for a debut sale of shariah compliant bonds. The country, which has an AAA credit rating at Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, is planning to become the second non-Muslim nation to issue a sovereign Islamic bond after the U.K. raised 200 million pounds ($335 million) in June. Ministry of Finance officials will meet investors in Europe, the Middle East, and Asia from the end of September to promote the proposed sale. The ministry is planning to use three government buildings as assets in the deal.