Malaysia

Khazanah Launches #Sukuk Exchangeable into Citic Shares

#Malaysia's Khazanah Nasional pushed out an exchangeable sukuk to raise US$ 309.4 million to US$ 320.8 million. The zero-coupon sukuk are exchangeable into CITIC Securities Co Ltd’s Hong-Kong listed H-shares. They have a tenor of five years and an investor put option after three years. The sukuk will be listed on the Singapore Exchange Securities Trading Limited, Labuan International Financial Exchange and Bursa Malaysia. CIMB and J.P. Morgan are the joint bookrunners and joint lead managers for the transaction.

Khazanah's RM1.27b #Sukuk oversubscribed 5.5 times

Khazanah Nasional's exchangeable Sukuk of USD320.8mil (RM1.27bil), which has a tenure of five years, was oversubscribed by 5.5 times. The exchangeable Sukuk would reference the value of H-shares in CITIC Securities, China’s largest securities brokerage firm. Khazanah managing director Tan Sri Azman Mokhtar said it was opportune for the fund to price the deal on the back of positive market sentiments in China. The exchangeable Sukuk is structured based on the principle of Wakalah and provides the Sukuk holder with the option to receive cash or shares upon exchange. The Sukuk will be listed on the Singapore Exchange Securities Trading Limited, Labuan International Financial Exchange and Bursa Malaysia. CIMB and J.P. Morgan are the joint bookrunners and joint lead managers for this exchangeable Sukuk transaction.

US$50m of i-VCAP Islamic ETF expected to be subscribed

i-VCAP Management is expecting US$50 million (RM198 million) to be subscribed upon its initial subscription period via an initial public offering on Feb 9. The MyETF-US50 will be the first US dollar-denominated Syariah-compliant security to be listed on Bursa Malaysia. i-VCAP CEO Khairi Shahrin Arief Baki said ETFs are one of the fastest growing investment products in the world. The MyETF-US50 is aimed at providing investment results that closely correspond to the performance of the benchmark index, the Dow Jones Islamic market US Titans 50. According to i-VCAP chairman Tuan Haji Rosli Abdullah, the MyETF-US50 enables investors to access the US equity market in US dollars, marking a new chapter in the Malaysian capital market.

Responsible finance: #Malaysia leads the way with new guidelines

The Securities Commission Malaysia recently issued its 'Guidelines on Sustainable and Responsible Investment (SRI) Funds' to promote the growth of such funds in Malaysia. Often termed as ethical investments, SRI investments not only provide benefits to society, but also encourage corporate practices that embrace environmental stewardship, consumer protection, human rights and diversity. The new guidelines, which enable market funds to be designated as SRI funds, will widen the range of SRI products. According to the new guidelines, the policies and strategies of SRI funds must adopt one or more sustainability considerations such as the UN Global Compact Principles, the Sustainable Development Goals and other environmental, social or governance factors. The Guidelines also introduce additional disclosure and reporting requirements to encourage more transparency.

TradePlus Shariah #Gold Tracker marks #Malaysia’s first commodity ETF

Affin Hwang Asset Management has launched the TradePlus Shariah Gold Tracker (GOLDETF MK) on Bursa Malaysia, the first commodity-tracking ETF listed in Malaysia. The fund provides investors with exposure to gold through a shariah-compliant investment structure. The fund tracks the LBMA Gold Price AM Index by investing in physical gold bars purchased from London Bullion Market Association-accredited refineries. Datuk Seri Tajuddin Atan, CEO of Bursa Malaysia, said this ETF would allow investors to buy and sell gold in the same manner as trading shares on Bursa Malaysia. The government of Malaysia has also announced that ETFs traded on Bursa Malaysia will be exempted from stamp duty starting from 1 January 2018. GOLDETF’s annual fees (including management, trustee and custody fees) is 0.76%.

BTMU provides $353m Islamic #loan to Malaysian Saudi Telecom unit

The Bank of Tokyo-Mitsubishi UFJ has provided an Islamic syndicated loan to the Malaysian affiliate of Saudi Telecom. The ringgit-based loan amount is about 41.7 billion yen ($353 million). BTMU is the first Japanese bank to act as an agent bank for a syndicated loan in Malaysia. The loan will be provided with HSBC and Standard Chartered Bank of the U.K. Japanese banks in Malaysia mostly provide loans to Japanese companies operating in the country. Now, BTMU aims to expand operations in the country through Islamic finance. BTMU has extended foreign-currency Islamic loans in Malaysia since 2008 and ringgit-based Islamic loans since 2014. The ratio of Islamic finance to total loans in Malaysia rose to about 30% at the end of 2017, from 17% at the end of 2009.

Saudi Telecom gets 1.5 bil ringgit Islamic #loan

Saudi Telecom Co (STC) has obtained a 1.51 billion ringgit (US$378.5 million) Islamic loan through its Malaysian subsidiary. The company will use the Islamic loan to refinance existing debt originally used to acquire a stake in Malaysian mobile-phone firm Maxis. STC Malaysia Holdings hired Bank of Tokyo-Mitsubishi UFJ (Malaysia), HSBC Amanah Malaysia and Standard Chartered Bank Saadiq to arrange the deal. The syndicated financing uses a sharia-compliant structure known as commodity murabaha. Bank of Tokyo-Mitsubishi UFJ (Malaysia) will act as the investment agent to manage the cash flows of the facility and to execute the commodity murabaha transactions.

Nominations open for Royal #Award for Islamic Finance

The Royal Award for Islamic Finance is on a global search for an exceptional individual in the field of Islamic finance. The biennial award is spearheaded by Bank Negara Malaysia and the Securities Commission Malaysia. It recognises Islamic finance visionaries who contribute significantly to the growth of Islamic finance. The award recipient is selected by an independent seven-member international jury chaired by Tun Musa Hitam. The most recent recipient of the Royal Award for Islamic Finance in 2016 was Prof Datuk Dr Rifaat Ahmed Abdel Karim. He was instrumental in founding the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB). The closing date for nominations is March 31, 2018, and interested persons can submit their nominations online.

#Malaysia seeks to catapult Islamic finance to the next level

Malaysia’s Islamic finance industry has grown tremendously since 2004, when Bank Negara Malaysia began issuing Islamic banking licenses to foreign Islamic banks. The strong growth is also reflected in the country's Islamic asset management industry, with Malaysia accounting for 34% of the US$78 billion global Islamic assets under management as at the end of 2016. Malaysia strongly believes that Islamic finance must continue to appeal to the broader community.

CIMB Islamic plans RM10b #sukuk, gets AAAIS rating from MARC

Malaysian Rating Corporation (MARC) has assigned a preliminary rating of AAA with a stable outlook to CIMB Islamic Bank's proposed RM10 billion senior Sukuk Wakalah Programme. MARC said the sukuk wakalah would provide an additional platform to raise liquidity for the bank should it need to strengthen its funding base. The rating agency added that the bank would be able to utilise its existing Basel III Tier-2 Junior Sukuk Programme to support its capital position when required. CIMB Islamic’s existing sukuk issuances, rated and affirmed by MARC with a stable outlook are as follows: an RM5 billion Tier 2 Junior Sukuk programme at AA+IS and its RM2 billion Tier 2 Junior Sukuk programme at AA+IS.

#Malaysia begins Islamic stock lending

Malaysia’s stock exchange (BMSC) has launched a framework for Islamic stock lending. The introduction of Islamic stock lending aims to provide a Shariah-compliant alternative to the securities borrowing and lending negotiated transaction framework (ISSBNT). According to Bursa Malaysia, Islamic stock lending will provide a more facilitative trading environment and improve trading liquidity. Any person approved by BMSC to be an approved supplier may enter sell its own securities. An approved user is required to have a minimum of RM 50 million (USD 12.2 million) in shareholders funds. Initially, close attention will be given to extending Islamic exchange traded funds in particular, as well as enhancing levels of liquidity.

Realising SDGs through Islamic finance

According to Sultan Nazrin Muizzuddin Shah, Islamic finance has a variety of social finance tools which can be used to increase funds and mobilise donations from a diverse range of sources. Through zakat, sadaqah and waqf, Islamic finance enshrines sustainability, responsibility and generosity. The International Federation of Red Cross and Red Crescent Societies (IFRC) is now looking to the tools of Islamic finance for humanitarian funding. The United Nations’s Sustainable Development Goals (SDGs) are also concerned with protecting the planet and conserving the environment. Malaysia has paved the way for green sukuk and this may become the catalyst for further responsible investments all over the world.

Muslim countries should tap into #green #sukuk market, says CIMB Islamic

According to CIMB Islamic Bank CEO Rafe Haneef, Muslim countries and customers with such affinity should tap into the green sukuk market, given the estimated US$45 trillion demand for such assets. He added that green sukuk, was very much part and parcel of shariah compliance, which should be halal and sustainable. In the context of global sukuk, the total size per year is about US$45 billion to US$50 billion, so green bonds are already five times the size of sukuk. RAM Rating Services deputy CEO Promod Dass said there was US$3 trillion worth of green investment needs in Asean from 2015 to 2030. Maybank Group global banking head Datuk Muzaffar Hisham opined Malaysia was in the right direction of participating in the green sukuk sector. He added that appetite for green investment was growing, the only question remaining was how to accelerate it.

Bursa #Malaysia launches Islamic Securities Selling and Buying Negotiated Transaction

Bursa Malaysia launched the first Shariah-compliant alternative to the Securities Borrowing and Lending Negotiated Transaction (SBLNT) framework, called Islamic Securities Selling and Buying Negotiated Transaction (ISSBNT). The new ISSBNT framework is based on the SBLNT model and is expected to provide a more facilitative trading environment for securities. Bursa Malaysia CEO Datuk Seri Tajuddin Atan said market participants would now have an alternative avenue which is compliant with Shariah principles. The model was chosen because it is more widely used by the market due to its flexibility. Tajuddin noted that ISSBNT is expected to bring an uplift of around 5 to 10% growth in funds transaction in the next 12 months.

The new #sukuk way for efficient construction financing

#Malaysian real estate developer SkyWorld is raising some RM50mil under tranche one of the RM600mil sukuk musharakah programme for its SkyAwani Residence development in Kuala Lumpur. The novel sukuk transaction is the first securitisation of progress billings combined with affordable housing. RAM Ratings Services has assigned a preliminary AA3/stable rating for the sukuk, while Danajamin Nasional is guaranteeing the support facilities. Developed, arranged and advised by NewParadigm Capital Markets, the project has achieved 100% sales. According to NewParadigm executive director Danny Kwan, the primary objective of this financial programme is to monetise the unbilled sales upfront rather than later. It provides for more efficient cashflow management for the residential developer.

Ratings scheme planned for #Islamic #endowments

Islamic institutions in Bahrain and Malaysia are developing a ratings scheme for Islamic endowments, or awqaf. The Bahrain-based Islamic International Rating Agency and the Malaysia-based International Institute of Islamic Waqf (IIIW) hope that greater accountability in the management of awqaf can help integrate them into Islamic financial markets. This could mobilize idle assets which are estimated to be valued between $100 billion and $1 trillion across the globe. Awqaf operate social projects such as hospitals, mosques and schools with donations received from Muslims. Most Awqaf do not disclose financial figures, but their underperformance is believed to be considerable since they have traditionally been run by administrators rather than investment managers.

First Shariah-compliant commodity ETF launched by Affin Hwang AM

Affin Hwang Asset Management (Affin Hwang AM) has launched its first Shariah-compliant exchange traded fund (ETF) with investment results that closely track the performance of gold prices. The new TradePlus Shariah Gold Tracker will invest a minimum of 95% of its net asset value in physical gold bars purchased from the London Bullion Market Association (LBMA). The remaining balance is invested in Islamic money market instruments and Islamic deposits for liquidity purposes. Affin Hwang AM managing director Teng Chee Wai said the fund provides an efficient entry point to gain exposure to gold by tracking the LBMA Gold Price AM index. Certified by advisory firm Amanie Advisors, each unit of the fund is physically-backed in a secure vault. Investors are provided with an option for physical redemption, for a minimum redemption unit block of 500,000 units, which is equivalent to an estimated 5kg of gold.

VBI to take Islamic finance to next level of growth

#Malaysia is introducing value-based intermediation (VBI) to take its Islamic finance industry to the next level of growth. As a first step, Maybank Islamic initiated the pilot launch of its rent-to-own (RTO) home scheme, called HouzKEY, targeted at properties priced under RM1 million. For now, the product is limited to the bank’s employees but should become available to the public early next year. The bank is aiming for a portfolio size of RM1 billion within the first year. According to experts, this is just the beginning of more RTO schemes to come as several other Islamic banks are expected to launch their own versions. BIMB Holdings group CEO Malkit Singh Maan says the bank is hoping to launch its RTO product for affordable homes in the first quarter of next year. Other VBI products that banks may offer in the future are green technology financing and green sukuk.

#Takaful #Malaysia forms partnership with Ambank Islamic

Syarikat Takaful Malaysia said it has formed a partnership with AmBank Islamic and will market its general takaful products across the country. The takaful operator said that general takaful products for motor, fire/house and personal accident will be distributed across Ambank Islamic's distribution channels. The two companies will also promote new general takaful solutions tailored to Ambank Islamic's customers. Takaful Malaysia group CEO Datuk Sri Mohamed Hassan Kamil said he was delighted to bring the group's general takaful solutions to serve the evolving needs of AmBank Islamic customers.

The disruptive impact of #Islamic #fintech

Fintech is fast gaining traction in the financial services industry, as both start-ups and traditional companies proactively incorporate methods to stay in the lead. In Malaysia, the national bank itself supports the role of fintech in Malaysia’s overall finance industry. According to Bank Negara Malaysia assistant governor Marzunisham Omar, the next growth phase of Islamic finance requires the industry to ride the fintech wave. AmInvestment Bank CEO Raja Teh Maimunah Raja Abdul Aziz said Islamic banks do not have an option not to adopt fintech. The only way that Islamic banks or Islamic funds or Islamic crowdfunding can reach out is to adopt mobile technology. She revealed that AmInvestment Bank is currently experimenting with its clients to use Distributed ledger technology (DLT) for the issuances of bank guarantee.

Syndicate content