IslamicFinance.de

Islamic bonds are falling behind developing-nation debt for a second quarter as investors search for higher yields in non-investment grade securities.
According to the HSBC/Nasdaq Dubai US Dollar Sukuk Index, Shariah-compliant notes returned 1.5 % this year and non-Islamic bonds in emerging-market countries gained 4.1 %.
Sales of Islamic debt are intensified in Indonesia, Malaysia and the GCC, while lower-rated nations such as Egypt and the Philippines are still planning issuance.

Abu Dhabi National Energy Company has successfully ended a $215 million sukuk issuance as part of its MYR3.5 billion sukuk program established in November 2011.
The issue gathered strong interest from a well-diversified group of top Malaysian asset management companies and quality Islamic investors. The 10-year sukuk has been raised with a profit rate of 4.65 percent with a full swapped rate to dollars of 5.3 percent.
Standard Chartered Saadiq Berhad was the lead arranger in this transaction.

CALL FOR PAPERS - Islamic capital markets, Deadline: Submission of Abstract: March 15, 2012
Islamic Research and Training Istitute – Islamic Development Bank, Jeddah, Saudi Arabia

Islamic capital markets are to become an important part of the Islamic financial system. While new products are steadily coming into the market and the Islamic investment instrument are growing, Islamic capital markets still constitute a very small niche. For a discernible impact on the investment promotion, market stability, and equitable socio-economic development there is a growing need to accelerate the process of product development, to create conducive regulatory environment and to improve the market practices. This task requires development of new human capital and knowledge base.

With this larger objective, the immediate focus of this conference is on three issues:
• Design and use of Islamic financial products for Islamic capital markets.
• Identification of the needs for and the implications of market regulations for development of Islamic capital market.

The success of Saudi Arabia’s first government-backed Islamic bond issue, and the dairy company Almarai’s planned sukuk, will set the stage for what will probably be one of the kingdom’s strongest years for Islamic bonds.
The Almarai bond plus the four as-yet-unannounced sukuk issues that HSBC is also preparing, would total “multiple billions” of Saudi riyals. Saudi Arabia’s government is encouraging the current expansion of the sukuk market.
According to Khalid Howladar, an analyst with Moody’s Investment in Dubai and Fahad al-Saif, the HSBC sukuk developer, by issuing government-backed sukuks, Saudi Arabia also is trying to expand the capacity of its capital markets.

According to Mohamed Awad Bin Humam, the governor of the Yemeni central bank, his country plans to launch Islamic bonds soon to finance government projects.

Al Hilal Bank will launch its first sukuk fund, the Al Hilal Global Sukuk Fund, advocating the bank's full commitment to product and service innovation and its keen interest in strategic segments of the financial services sector.
Investors will have the opportunity to allot a minimum subscription of $10,000 at an initial NAV of $10 per unit.
Fund sponsor will be Al Hilal Bank while CIMB Principal Islamic Asset Management will serve as the fund's investment advisor.

Saudi Arabia's central bank will have a bigger role in the supervision of the country's financial sector as the kingdom weighs opening up its stock market to direct investments by foreigners.
The country's Capital Market Authority (CMA) signed a cooperation agreement with the central bank or Saudi Arabian Monetary Agency (SAMA) to coordinate supervision of the financial sector in order to improve its stability.
According to the agreement, the two entities will work together in the supervision of corporate governance, risk management measures, initial public offerings (IPOs), sukuk issuance and merger and acquisition regulations as well as the exchange of information.

Goldman Sachs International announced last September that it was going to the market to raise financing totaling $2 billion through a Murabaha sukuk issuance.
The issuance is based on a structure accepted by Dar Al-Istithmar Limited, the Shariah adviser to the issuer, Global Sukuk Company Limited, whose Shariah Supervisory Board is chaired by Hussain Hamed Hassan and includes Ali Al-Qaradaghi, Abdul Sattar Abu Ghuddah, Abdulaziz Fawzan Saleh Al-Fawzan and Aznan Hasan.
The issuance would have passed as a routine Murabaha sukuk save that the issuer was doing it on behalf of arguably the most high profile investment bank in the world, Goldman Sachs.

Saudi Arabia launched its first government-backed Islamic bond this week, for its aviation agency, establishing a benchmark for pricing of conventional and Islamic bond issues this year because of its size.
At $4 billion, it was the largest sukuk ever issued within the kingdom. The sukuk, guaranteed by the Saudi Ministry of Finance, was oversubscribed three times, and the Saudi General Authority for Civil Aviation will use the proceeds to finance the expansion of King Abdulaziz International Airport in Jidda.
The 10-year sukuk was sold in the domestic market, available only to Saudis.

After Indonesia failed to sell the sukuk last year as investors asked for higher yields, the country plans to launch 2 trillion rupiah ($223.59 million) of project-based sukuk in the first half of this year.
Finance minister Agus Martowardojo, who gave the statement, added that the government posesses underlying assets of 5 trillion rupiah to issue project-based sukuk this year. Moreover, Indonesia is also aiming to issue a global sukuk at the end of the first half.

Credit Agricole SA (ACA) has two mandates to administer Islamic bond sales in Saudi Arabia. The statement was given by c the bank's global head of Islamic banking.
He added the fact that one of the issues will be denominated in U.S. dollars.

Dubai Financial Services Authority highlighted the advantages of listing conventional bonds and Sukuk on the region's international exchange, at a forum attended by leading investment banks and law firms.
After the transfer of NASDAQ Dubai's Official List of Securities to the DFSA in October 2011, the event that took place at the Dubai International Financial Centre (DIFC) gave away details of the new listing and admission framework, giving issuers the ability to list debt in a streamlined manner under an aggressive timetable, comparable to listing regimes on other international exchanges.
NASDAQ Dubai is the only exchange in the Middle East that has direct access to Euroclear, an International CSD, supplying an easy transaction process with the NASDAQ Dubai CSD for international and regional investors.

Abu Dhabi government-owned Al Hilal Bank has validated the appointment of three banks to administer its debut $500 million Islamic bond issue, which will be launched later this year.
Mohamed Berro, chief executive, noted that the banks chosen for the issue are: National Bank of Abu Dhabi, HSBC and Standard Chartered Bank. Berro added that the issue would help fund the bank's growth and strengthen its balance sheet.

It appears that HSBC Saudi Arabia led a very successful SR15 billion ($4 billion) 10-year Sukuk issuance for the General Authority of Civil Aviation (GACA). The funds from the Sukuk launch will be used for the construction of the new King AbdulAziz International Airport in Jeddah.

It seems that Citigroup Europe is interested in entering into the sukuk market in Turkey. The statement came from Alberto Verme, the group’s Middle East and Africa (EMEA) board director.
Interest-bearing bonds are not permissible in Islam., so sukuk securities are structured to comply with the investment principles of Islamic law.

The Shari'ah Board of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), in view of the increased use of Sukuk worldwide, the public interest in them, and the observations and questions raised about them, analyzed the subject of the issuance of Sukuk in three sessions.
The results were the following:
1. Sukuk, to be tradable, must be owned by Sukuk holders, with all rights and obligations of ownership, in real assets, whether tangible, usufructs or services, capable of being owned and sold legally as well as in accordance with the rules of Shari'ah.
2. Sukuk, to be tradable, must not symbolize receivables or debts, except in the case of a trading or financial entity selling all its assets, or a portfolio with a standing financial obligation, in which some debts, incidental to physical assets or usufruct, were included unintentionally.
3. It is not permissible for the Manager of Sukuk to undertake to offer loans to Sukuk holders, when actual earnings fall short of expected earnings.

Sukuk issuance in 2012 will increase by 25-30% to eradicate the USD 200 billion barrier, despite challenges that face prosperity of this industry, such as the financial struggles of some European countries and their effect on the rest of the world. This was shown in a report prepared by KFH-Research about the expected horizons of global Sukuk in 2012.
The report noted that the Sukuk market witnessed unprecedented growth during 2011 that reached 88% compared to last year. It added that Kuwait has come back to the Sukuk issuance market after three years through the issuance of Al-Oula Investment Company. It also indicated that the sukuk industry has emerged as one of the main components of the Islamic financial system.

UAE energy group Dana Gas appointed an international firm to advise on its $920 million convertible sukuk maturing in October, adding it won't stop to meet its obligations.
Dana Gas shares were up 5.9 per cent at 0945 GMT, while the sukuk was unchanged at 64 cents on the dollar.
Dana Gas has a 3 per cent stake in Hungarian group MOL, worth around 55.2 billion forints ($225m). Potential sales of businesses in Egypt and Kurdistan are also filled with political risk, which would hit the price.
Dana Gas' chief executive told Reuters in September the company was owed around $200m by Egypt.

HSBC Amanah anticipates global sukuk issuance to grow to US$44 billion in 2012 from US$26.5 billion last year. Malaysia was forseen to account for 60% of the total while the Middle East and North Africa (MENA) region 32%. It also stated that governments and government-related entities were likely to account for 50% while the finance and corporate sectors 25% each.
To encourage more Asian sukuk issuances, however, there was a need to help Middle Eastern investors understand Asian sukuk and capital markets better.

There is a need to help Middle Eastern investors understand Asian sukuk, because if investors from the Middle East become familiar with Asian sukuk, it can be a driving force for more of its issuance in Asia. The statement came from Rafe Haneef, HSBC Amanah Malaysia Bhd chief executive officer.
He stated that infrastructure projects in Asia and the Middle East are anticipated to lead the growth of sukuk issuance this year, adding that Malaysia's biggest toll expressway company has recently launched a US$10 billion sukuk.