IslamicFinance.de

PwC Luxembourg in association with the Luxembourg Stock exchange publishes a new brochure about Sukuk listing in the Grand Duchy. This document distributed on 6 May 2013 during the “Journée boursière” provides an overview of the Islamic Finance Market in Luxembourg and highlights the benefits of Sukuk Listing and Trading in Luxembourg. 16 Sukuk have been listed on the Luxembourg Stock exchange. With more than 3,127 listed issuers coming from 103 countries, the Luxembourg Stock Exchange meets capital market players’ needs. Luxembourg remains one of the most competitive, stable and secure environments in Europe to locate securitisation transactions. The development of Islamic Finance in Luxembourg has been set as priority by the Grand Duchy.

Telecom Malaysia (TM) has enough cash to redeem its RM2 billion sukuk that will mature on December 31, according to its senior officials. TM has RM3.7 billion in cash and bank balances as at end-2012, its chief financial officer Datuk Bazlan Osman said. Therefore, the group does not see any need to issue more bonds to raise funds for now, he added. TM’s healthy reserves were lifted by a year-on-year growth in net income of 6.1 per cent from RM1.19 billion in 2011 to RM1.26 billion last year. This was largely helped by a 9.2 per cent revenue growth from RM9.15 billion in 2011 to RM9.99 billion last year, which TM claimed is the highest in the industry.

A sukuk deal issued by Asya Sukuk Company Limited is the first Turkish bank sukuk internationally placed where the obligor is a company which is entirely Turkish owned. The sukuk certificates issued are unconditionally and irrevocably guaranteed by Bank Asya. The inaugural issuance is for $250,000,000 and will have an initial yield of 7.5% per annum. The sukuk will be issued in fixed rate resettable Tier 2 certificates which are due in 2023. BNY Mellon has been appointed delegate, principal paying agent, registrar, transfer agent and Irish listing agent on the deal. It will perform fiduciary duties and make profit and principal payments to investors on behalf of Asya Sukuk Company Limited. It will also handle administrative duties related to the issuance of the certificates.

Indonesian corporate sukuk sales are expected to reach a full-year record as $92 billion of state-backed development projects buoy issuance. Bank Muamalat Indonesia and Adira Dinamika Multi Finance were among issuers of Rp 1.5 trillion ($154 million) of securities. The government is seeking to reduce fuel subsidies to set aside more funds for roads, railways and power stations to spur growth. Finance companies have accounted for 72 percent of sales this year, while state-owned construction company Hutama Karya and electricity producer Perusahaan Listrik Negara may sell Islamic bonds in 2013. The sectors with the biggest potential to actively tap into the sukuk market will be those involved in infrastructure-related projects and utilities.

Qatar Islamic Bank is not expecting to issue more Islamic bonds before 2014, according to its Chief Executive Officer Bassel Gamal. The CEO said that there seems to be enough liquidity currently. Last October, it tapped the bond market with a US$750 million five year sukuk bond issue. This is part of the overall sukuk programme of the bank valued at US$1.5 billion. Gamal added that local currency sukuks would be expected to be issued in the coming years. He also said that many countries encourage local issuances of sukuk, such as Saudi Arabia and Malaysia.

With the ongoing credit squeeze from the debt crisis and uncertainty still stalking capital markets, many Western firms are eyeing up the Islamic liquidity pool as an alternative source of finance. The Irish energy group ESB had applied to local regulators in Malaysia for permission to issue a bond, with the aim of raising €1 billion. Had the issuance gone ahead, the ESB would have become the first Irish company, and one of the non-financials in Europe, to issue a Sharia-compliant bond. Nonetheless, prospective investors reportedly showed interest in investment in asset-rich companies like the ESB. Ireland already commands a share of pie when it comes to fund management, with some 20 per cent of Europe’s Sharia-compliant funds domiciled in Dublin’s Irish Finance Services Centre (IFSC).

Indonesia's finance ministry raised 1 trillion rupiah ($102.88 million) worth of sharia bonds on Tuesday, below its target of 1.5 trillion rupiah. The ministry only sold the 30-year, project-based sukuk with the yield at 6.82781 percent. There were no winning bids for the rest of the bonds, which included 5-, 14- and 24-year project based sukuk. According to the debt office, total incoming bids were 2.43 trillion rupiah.

Saudi Electricity Company (SEC) has issued the world's first international 30-year sukuk. The benchmark $2 billion deal is SEC's first sukuk offered to US and other international investors. More tan six-and-a-half times oversubscribed, the sukuk evidences strong international demand for longer-dated Islamic instruments. Although the debut bond has opened new vistas for Islamic finance, the number of companies eligible to take advantage of the precedent is unclear. In the short term, it is likely that only quasi-souvereigns will suceed in securing longer tenors.

Al Bayan Holding became the first Saudi Arabian company to issue an Islamic bond in Malaysian ringgit by issuing 200 million ringgit ($65.4 million) as the first tranche of a newly established 1 billion ringgit programme. Pricing details were not immediately available. Al Bayan issued the sukuk as a wakala. HSBC Holdings' Islamic unit in Malaysia, Hong Leong Islamic Bank, and Kenanga Investment Bank Bhd acted as joint lead managers on the deal, while Abu Dhabi's Al Hilal Bank was manager in the United Arab Emirates.

Khazanah Nasional Bhd., Malaysia’s state investment company, selected CIMB Group Holdings Bhd. (CIMB), Deutsche Bank AG (DBK) and Standard Chartered Plc (STAN) to help arrange a sale of $1 billion of convertible Islamic bonds. Khazanah could raise $500 million to $1 billion, though a final decision on whether to proceed has yet to be made. The sukuk would be exchangeable into shares of companies controlled by Khazanah. No decision has been made on which companies’ shares would back the Islamic bond.

Turkish Islamic bank Turkiye Finans issued a $500 million dollar-denominated sukuk, at a price of 3.95 percent on Wednesday. The bank, majority owned by Saudi Arabia's National Commercial Bank, had mandated Citigroup, HSBV, NCB Capital and Noor Islamic Bank for the issue last week.

Mohammed Abdulla, Chief Executive of Sharjah Islamic Bank rang the opening bell at Dubai Financial Market (DFM) to celebrate the listing of a Sukuk issued by Sharjah Islamic Bank (SIB) on NASDAQ Dubai. The listing of SIB's 500 million dollar Sukuk provides further support for the campaign to promote the 'Dubai the Global Center of Sukuk' initiative launched in January 2013. SIB's listing brings the nominal value of Sukuk listed on Dubai exchanges to 12.125 billion dollars. SIB's Sukuk was more than 6 times oversubscribed with 53% of the Sukuk allocated to MENA based investors, 30% allocated to investors based in Asia and 17% to investors based in Europe.

The Kuala Lumpur-based International Islamic Liquidity Management Corp (IILM) plans to issue $500 million through its sukuk programme in the second quarter of this year. The long-awaited announcement was overshadowed by the unexpected pull-out of Saudi central bank, selling its shareholding to Qatar and Malaysia. According to industry executives, the pull-out would not necessarily deter Saudi commercial banks from buying the IILM sukuk - and that even if it did, demand in other countries would be more than ample. A key factor will be the yield that the IILM sukuk pays versus the cost of funds at individual banks.

Bahraini lender Al Baraka Bank's Turkish unit plans to issue a $200 million, 10-year subordinated sukuk by the end of April or early May, the Bahraini bank's chief executive Adnan Ahmed Yousif said yesterday. Al Baraka Turk, which signed a $450m murabaha loan in September, has appointed BNP Paribas, Al Hilal Bank, Barwa Bank, Emirates NBD and Japan's Nomura for the Tier 2 sukuk.

Fitch Ratings has assigned Turkiye Finans Katilim Bankasi A.S.'s (Turkiye Finans) forthcoming Sukuk issue an expected rating of 'BBB(EXP)'. Turkiye Finans as the managing agent will actively manage this portfolio and ensure that profits are in line with the entire expected return on the Sukuk. The sukuk are asset-based not asset-backed. The 'BBB(EXP)' expected rating assigned to the Sukuk is driven solely by Turkiye Finans' Long-term foreign currency Issuer Default Rating (IDR) of BBB' as the Sukuk structure is viewed as an originator-backed/asset-based structure.

The Saudi Stock Exchange (Tadawul) announces that the suspension of Saudi Basic Industries Corp Sukuk 3 took place on Monday 15/04/2013 based upon the CMA approval of Saudi Basic Industries Corp. request to purchase (redeem) the SABIC SUKUK 3 issue. Accordingly, the SUKUK will be delisted from the Saudi Stock Exchange (Tadawul) on Wednesday 15/05/2013.

The constant growth in global sukuk issuance is not necessarily a sign of healthy development for the Islamic finance industry, for three reasons. Although at first sight, it appears that sukuk issuers have the necessary internal fund resources to finance their investment projects, the massive sukuk issuance actually evidences the fact that many of them are facing a shortage of liquidity. The second reason is that 95% of the sukuk issued recently are non asset-based sukuk and thus regarded as unsecured debt. As such, they are identical to conventional bonds in terms of credit risk. Furthermore, a considerable part of the issued sukuk don't comply fully with Shariah guidelines and close monitoring is still absent. There is a need to rethink the entire sukuk industry in order to tend towards more Shariah compliance and mitigate the adverse economic risks associated with the current trend.

Turkiye Finans mandated Citigroup, HSBV, NCB Capital and Noor Islamic Bank for a dollar-denominated sukuk issue. Turkey's Capital Markets Board approved last week the bank's application for a sukuk issue of $500 million and 100 million lira ($55.78 million). ($1 = 1.7929 Turkish liras). Turkiye Finans is majority owned by Saudi Arabia's National Commercial Bank.

Investors labelled a $500m sukuk from Sharjah Islamic Bank this week as exceptionally tight, but the deal nonetheless drew $3.2bn of orders on Tuesday. The sukuk priced inside the initial guidance range, ending up with a profit rate of 2.95% after the leads mooted low 3% on Monday.

Sharjah Islamic Bank launched the sale of a $500 million sukuk on Tuesday at a profit rate of 2.95 percent. Final pricing is due to follow later on Tuesday. Abu Dhabi's Al Hilal Bank, HSBC Holdings, Kuwait's Liquidity Management House, a unit of Kuwait Finance House , and Standard Chartered Plc are mandated lead arrangers on the sukuk.