IslamicFinance.de

Goldman Sachs has bought forward a claim against Bahrain’s TIBC whose default 10 years ago triggered the biggest financial crisis in Saudi Arabia. The Bahraini lender raised money in international markets, transferring the funds to now defaulted Saudi conglomerate Ahmad Hamad Algosaibi and Brothers (AHAB). After TIBC defaulted on a foreign exchange deal, AHAB collapsed along with another Saudi conglomerate Saad Group, leaving an estimated $22 billion in unpaid debts. TIBC, administered by the Central Bank of Bahrain, has a claim of around $3 billion against AHAB, while more than 60 banks that have lent money to TIBC remain unpaid.

The world is sinking under too much debt and an ageing global population means countries' debt piles are in danger of growing out of control, the European chief executive of Goldman Sachs Asset Management has warned. Andrew Wilson, head of Europe, Middle East and Africa (EMEA), said growing debt piles around the world posed one of the biggest threats to the global economy. The Organisation of Economic Co-operation and Development (OECD) has also sounded out a warning about Japan's growing debt pile. The Goldman chief also said that warnings about liquidity shortages in the market were being "overplayed", especially with regards to the corporate bond market.

Middle Eastern banks bought the vast majority of a debut $500 million sukuk issue by Goldman Sachs, a positive sign for other conventional banks hoping to tap the region’s liquidity by issuing Islamic debt. Goldman priced its five-year sukuk on Tuesday at a profit rate of 2.844 per cent, drawing about $1.5 billion of investor orders, after roadshows in Qatar and the United Arab Emirates. Middle East investors bought 87 per cent of the Goldman sukuk, while 11 per cent went to Europe and two per cent to Asian investors. Banks bought 77 per cent of the bonds, asset managers bought 22 per cent and private banks bought one per cent. Meanwhile, France’s Societe Generale and Japan’s Bank of Tokyo-Mitsubishi UFJ set up sukuk programmes in Malaysia, but have not issued yet.

Three years after its first foray into the Islamic capital markets ended without a sale, investors piled in to buy sukuk debt from Goldman Sachs Group Inc. (GS:US) yesterday. The New York-based lender attracted bids for three times the $500 million of sukuk it sold. The five-year sukuk was priced to yield 90 basis points, or 0.9 percentage point, over the benchmark midswap rate. After failing to sell sukuk bonds in 2011 amid criticism the deal didn’t ensure debt would be traded at par, as required by Islamic law, Goldman adjusted the structure this time in a bid to appeal to more investors. The new issue is a Sukuk al Wakala. Standard & Poor’s rated the issue A-, the seventh-highest investment grade.

JANY Sukuk Company Limited priced a bond on Tuesday, with the Goldman Sachs Group, Inc as Guarantor. The Issue Amount is $500 million, its Maturity Date is September 23, 2019. Following are terms and conditions of the bond: Coupon 2.844 pct; Issue price Par; Spread 90 basis points; Underlying govt bond over the midswaps; Payment Date September 23, 2014. Lead Managers are Goldman Sachs International, Abu Dhabi Islamic Bank, Emirates NBD Capital, National Bank of Abu Dhabi, NCB Capital and QInvest. Fitch has assigned a rating of A, and Standard & Poor's A-.

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.

Goldman Sachs last week revived plans to issue a debut Islamic bond, a deal that was first mooted three years ago. In September 2011, Goldman set up a sukuk programme registered under the commodity murabaha format with the intention to follow it up with a deal. But some Islamic finance participants raised concerns over whether the proceeds would be used to lend interest-based money to Goldman’s clients. Those close to the transaction denied this at the time, but the programme expired unused. The hope is that the change in structure and circumstance would facilitate a different outcome this time round. The upcoming transaction will use the wakala structure, a cost-plus model with which Middle East Islamic investors are more familiar with, and it will be underpinned by crude oil assets.

Goldman Sachs is preparing to issue benchmark-sized, U.S. dollar-denominated sukuk with a wakala structure after announcing plans to meet fixed income investors, according to leads. The investment bank plans to issue the sukuk through the JANY Sukuk Co vehicle after meeting investors in the Middle East on Sept. 10 and 11, a document from lead managers said. Goldman Sachs picked itself, Abu Dhabi Islamic Bank, Emirates NBD, National Bank of Abu Dhabi and NCB Capital to arrange the investor meetings.

Bank Asya said on Wednesday it has mandated Goldman Sachs as its financial advisor for a strategic partnership, without providing further details. Bank Asya shares traded on the Borsa ?stanbul (BIST) were down 3.5 percent on Wednesday. In March, the Qatar Islamic Bank (QIB) said it had entered into exclusive talks to buy a stake in Bank Asya without giving further details. Bank Asya also said last week it mandated its management to possibly sell its subsidiaries. The bank was earlier targeted by government officials who claim alleged irregularities in the bank. The government has however failed to prove these allegations.

Asya Katilim Bankasi AS (ASYAB), the Turkish banks in talks to sell a stake to Qatar Islamic Bank, has hired Goldman Sachs Group Inc (GS:US) as exclusive financial adviser on the deal. The Istanbul-based lender said in March that it was in exclusive talks with QIB for a strategic partnership, while the Doha-based bank said it was interested to take a stake in the lender. Bank Asya, in today’s filing, didn’t give more details. Bank Asya fell 2.9 percent to 1.66 liras at 10:35 a.m. in Istanbul. It’s gained about 14 percent this year.

Islamic investment firm Arcapita is the first Gulf company to emerge from U.S. bankruptcy under Chapter 11 rules. Arcapita’s plan is to transfer its assets into a new holding company which will dispose of them over time to pay off creditors and gradually wind-down the firm. Arcapita’s creditors include Barclays, CIMB, Royal Bank of Scotland, Standard Bank, Standard Chartered and the Central Bank of Bahrain – its largest creditor with $255.1 million owed.

Brandon Short, a former Goldman Sachs investment banking executive for MENA, will join with two former senior executives from Deutsche Bank to form World Business Partners UAE ("WBP"), a small business finance company based in Dubai. The other co-founders of WBP are Doug Naidus, former Managing Director and Global Head of the Residential Lending Division of Deutsche Bank, and former Chairman and CEO of MortgageIT, and Alex Gemici, former Managing Director and Head of MENA Residential Finance for Deutsche Bank. World Business Partners UAE will offer a Shariah-compliant financing solution ranging from AED 35,000 to AED 1.5 million for small businesses seeking working capital. WBP’s ijara asset sale-leaseback program allows SMEs to use the cash equity of their existing assets to fund their businesses’ growth and expansion.

Nearly 300 asset managers, water infrastructure and energy sector executives attended the event ‘Water: Emerging Risks and Opportunities' in New York to learn about opportunities for investing in water and the growing water demands of the United States’ booming unconventional energy sector. The event was sponsored by Goldman Sachs, GE and the World Resources Institute. On the other hand, the Interfaith Center for Corporate Responsibility convened a roundtable on the obligations of companies to respect the human right to water. Seventy religious investors, major water-intensive companies, and grassroots activists came together to tackle the question of what companies can and should do to ensure their operations “do no harm” to water supplies of local communities. Investors at the Goldman event very well may be driving the green technologies that can help the industrial companies at the ICCR session clean up their acts. But the problem for companies is that in most places, water is so cheap that investing in these solutions can sometimes be hard to justify on a traditional ROI basis, if not on a moral one.

After advising Goldman Sachs on a controversial 2$ billion sukkuk programme, Dar Al Istithmar has closed down.
Sources say that most of the staff moved to Khalij Islamic, with offices in London and Dubai. Clients have moved to Khalij Islamic as well.

Islamic financial body ASAS intends to globally launch a new scholar programme with aim to improve the financial literacy of scholars and this way to prevent the slowing of the industrial growth. In addition, it should be developed a global code of etics, in order to improve standards in the industry.

A controversial plan by Goldman Sachs to launch an Islamic bond has fired a global debate on whether conventional banks in the West should be allowed to engage in Islamic finance.
Some participants argued investment banks such as Goldman should be forbidden to issue Islamic bonds because the funds they raised could help to finance other parts of their business that did not comply with sharia or Islamic law.
Other participants stated the industry should focus instead on ensuring that each of their Islamic transactions complied with sharia law.

When the Occupy Wall Street (OWS) movement in lower Manhattan’s Zuccotti Park gathered thousands of dollars in surplus donations, its decision-makers agreed upon a deliberate strategy of placing those sums with the customer owned Peoples Federal Credit Union (Peoples).
In doing so, OWS adjusted itself with the principles of Bank Transfer Day. This is a separate movement the objective of which is to create a shift in banking attitudes among the American people in favour of taking deposits out of banks ‘too big to fail’ and transferring them to credit unions and bank like cooperatives that are much smaller and community oriented.

Dear Reader,

The last weeks we have read about criticism in regard to the Sharia compliance of the Sukuk program of the investment bank Goldman Sachs:

< Mohammed Khnifer reveals, after examining the offer circular thoroughly, three possible flaws in the overall structure.
1- Strong indication from the proposed structure and the prospectus as well that the sukuk is not, as they claim, Murabaha, but a Reverse Tawarruq.
2- Strong indication that Goldman will be using, eventually, the proceeds to fund its conventional activities.
3- The so called Murabaha sukuk is listed on the Irish Stock Exchange (ISE). There are some concernes on how the ISE will make sure that the securities will be traded at par value.>>

http://www.islamicfinance.de/?q=node/3155

Some remarks to this discussion:

Standard & Poor's (S&P) is inspecting again the credit ratings on 50 banks in the Middle East and North Africa under a new set of criteria, a move that could arise in higher funding costs for lenders already hit by the euro zone crisis and the Arab Spring revolts.
The agency reduced its ratings on 15 big global banks last month, mostly in the Europe and the US, because of the revamp of its ratings criteria.
JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Goldman Sachs, Barclays Plc and HSBC Holdings Plc were among the banks that had their ratings cut by one notch each.

The euro zone crisis has constrained investment in gold-backed exchange-traded assets so high that newcomer Source now owns the world's sixth largest physically-backed gold product and sees no need to promote it actively outside Europe and the Middle East.
It is owned by major investment banks BofA Merrill Lynch., Goldman Sachs, J.P. Morgan, Morgan Stanley and Nomura.