Saudi Arabia

Moody's: Strong Islamic #retail franchise drives profitability for #Saudi Arabia's Al Rajhi Bank despite tougher operating conditions

Moody's announced that Al Rajhi Bank's dominant Islamic retail franchise will continue to drive a strong financial performance into 2017. Despite pressure on the Saudi economy from lower oil prices, Al Rahji's retail focus delivers solid margins and asset quality. Moody's analyst Nitish Bhojnagarwala said Al Rajhi's Islamic retail portfolio drives higher financing yields and stronger margins than its peers both in Saudi Arabia and the Gulf Co-operation Council (GCC). Coupled with a modest cost base and relatively lower provisioning, this generated a solid return on assets of 2.5% for the first six months of 2016. Furthermore, strong profits, combined with solid retention rate, provide healthy internal capital generation for the bank, which had a tangible common equity ratio of 19.8% as of June 2016.

#Saudi Arabia-based asset manager with responsible #investment approach to Islamic finance joins RFI Foundation

SEDCO Capital has joined the RFI Foundation as an industry member. SEDCO brings a strong commitment to responsible finance as a Shari'ah compliant investment manager. SEDCO Capital offers services in asset management, including asset allocation, real estate, private equity, public equity, liquidity instruments, agriculture, timber, and commodities that conform to Shari'ah. According to CEO Blake Goud, the activities of the RFI Foundation will support greater convergence between Islamic and traditional responsible finance in the coming years.

CIBAFI technical #workshops schedule announced

The General Council for Islamic Banks and Financial Institutions (CIBAFI) has announced the schedule of its Technical Workshops on Product Development for Islamic Financial Institutions (IFIs). The workshops will start on August 30 and will be organized in Bahrain, Saudi Arabia and Sudan. The three-day Technical Workshops aim to provide participants with hands on technical knowledge and skills pertaining to product development, with a focus on Islamic financial services. CIBAFI, as the voice of the industry, aims to provide platforms such as these to develop human capital and bring industry professionals together.

MASIC partners on #Islamic #financing of $219 million New York Condo

Baker & McKenzie advised Mohammed I. Alsubeaei & Sons Investment Company a leading private equity investment company based in Saudi Arabia in a $219 mn dollar Murabaha facility to develop a luxury condominium development. MASIC provided the mezzanine financing for the development project, 45 Park Place, located in New York's TriBeCa neighborhood. The deal highlights the expansion of Islamic financing into the US real estate market.
MASIC partnered with other financial institutions and Soho Properties on the downtown condo project, which is scheduled for completion in 2018. Financiers for the project include Malayan Banking Berhad, London Branch; Intesa Sanpaolo S.p.A.; Warba Bank K.S.C.P.; and MASIC.
Baker & McKenzie partner Mona Dajani said, “This successful financing by MASIC is a milestone transaction in the United States using tiered Shari’ah-compliant facilities for commercial transactions. This transaction aptly demonstrates the increased activity in Islamic financings in the United States which has emerged over the past year.”
The Baker & McKenzie team, led by Ms. Dajani, included partner, Pat McDonald and associates Michael Reed, and Maher Haddad.

#Moodys’ Raised Emaar #Sukuk to Baa3 and EIB Sukuk to A3

Highlights and Performance
Bloomberg Malaysia Sukuk
Bloomberg Malaysia Sukuk Ex-MYR Total Return and Dow Jones Sukuk Total Return indices ended relatively flat at 103.9 (+0.02%) and 159.8 +0.01%) respectively, with yields tightened marginally by 0.6bps to 2.470%. Combined with the Fed‘s dovish meeting (June 15), uncertainty over the Brexit referendum jitters (June 23) and mixed signals from China over slowing economy bring the risk-adverse sentiment. The top performers over the week were INDOIS 3/26 and GS 9/19, which moved -11bps to -13bps; while the underperformers were dominated by banking papers — EIB 1/17, Noor Bank B3T1 and DIB B2T1 which widened 12bps each.
Bank Indonesia
Bank Indonesia cuts key policy rates by 25bps in a surprise move, with the BI rate, deposit facility rate and 7-day reverse repo rate now stand at 6.50%, 4.50% and 5.25% respectively. In addition to the rate cut, BI also raised the minimum threshold on loan-to-funding ratio to 80% from 78%. Indonesia risk premiums widened 1.5bps to 196.0bps.

Ramadan #Sukuk deal flow as tightest spread for a year issued by #Qatari Bank’s $750m print

A Riyal denominated Sukuk has been issued by the Saudi International Petrochemical Company. The company announced the successful completion of the issuance amounting to SAR 1.0 bn on June 16, 2016. The Sukuk was priced at 235 bps over six months SAIBOR for tenor of five years maturing on June 16, 2021. Riyadh Capital and NCB Capital helped to arrange the private issuance.
In the hard currency space, the Commercial Bank of Qatar issued a Eurobond which achieved the tightest spread for a MENA financial institution this year, conventional or Sukuk.
Whilst the issuance was not a Sukuk, demand for bond indicates strong investor appetite, a good sign of market demand which is likely to be tested with several large planned issuances post Ramadan. Most eagerly anticipated is a potential sovereign issuance by Saudi Arabia, as well as by Aramco, the Saudi national oil giant.

#Saudi's Bank Al Bilad says plans up to 2 bln riyal #capital-boosting #sukuk

Saudi Arabia's Bank Al Bilad has received regulatory approval to issue a capital-boosting sukuk worth as much as 2 bn riyals ($533.3 m), it said in a bourse statement on Sunday.
The issue will enhance its Tier 2, or supplementary, capital and last for 10 years, although the bank has the option to redeem the sukuk after the fifth year, according to the filing.
Sources told Reuters last month that Bank Al Bilad, one of the smaller lenders in Saudi Arabia, had chosen HSBC's local unit to arrange the Islamic bond offering. ($1 = 3.7502 riyals)

#Sipchem completes second #Sukuk offering

In a statement to the Tadawul, Saudi International Petrochemical Company announced the successful completion of a Shari’ah-compliant Sukuk issuance amounting to SAR 1.0 bn on 16 June 2016.
The Sukuk was priced at 235 bps over six-month SAIBOR for a tenor of five years maturing on June 16, 2021.
Eng. Ahmad Al-Ohali, Chief Executive Officer of Sipchem, commented that the successful completion of its second Sukuk offering will provide funding for general corporate purposes (including, without limitation, the repayment of any financial obligations). He expressed his appreciation to all who participated in the success of the Sukuk offering especially Riyad Capital and NCB Capital for their efforts in successfully managing the private issuance.
In a separate statement to the Tadawul, Sipchem also reported that with reference to the announcement to the market dated 12 May 2016 regarding the company’s intention to exercise its right of early redemption of its Mudaraba Sukuk with an aggregate amount of SAR 1.8 billion maturing on 6 July 2016, Sipchem successfully completed the early redemption of the Sukuk in full on 15 June 2016.

#Saudi’s Bank Al Jazira prices SAR2 billion capital-boosting #sukuk

Bank Al Jazira has priced a 2 billion riyal ($533 million) sukuk issue that will boost the lender’s capital reserves. The bank priced the transaction at 190 basis points over the six-month Saudi interbank offered rate. The Islamic bond issue is structured with a ten-year lifespan but includes an option for the lender to redeem the sukuk after five years. It was arranged by GIB Capital as well as the bank’s own investment banking arm.

#Saudi Arabia banks investigated for currency peg speculation products

Saudi Arabia’s government is investigating the country’s banks for creating structured products which allow traders to speculate on the possible end of the currency’s US Dollar peg. Saudi officials continue to maintain that the country has no plans to devalue, and a number of political analysts say such a move would be a last resort. Saudi Arabia’s oil price driven crisis has seen the country’s budget deficit widening out to 19% of GDP. This caused a collapse in government spending which has slowed economic growth to near zero. A devaluing of the Riyal would increase oil revenues in Riyal terms and provide more domestic revenues for the government, but would make imports a lot more expensive.

MIDEAST MONEY-#Saudi should keep options open on currency peg -c.bank paper

Saudi Arabia may need to change its currency's peg to the U.S. dollar if economic conditions shift. The riyal's peg at 3.75 to the dollar has been a cornerstone of Saudi policy since 1986. But the collapse of oil prices since 2014, which created a $100 billion state budget deficit, has fuelled speculation in financial markets. Foreign bankers said Saudi authorities had explored the idea of changing the peg in a broad review of economic policy. They concluded that a change would be counter-productive now but conceivable in the far future.

Will a New Vision for #Saudi Arabia Work?

In the face of plummeting oil prices, Saudi Arabia has announced an economic strategy to shake off Saudi overreliance on fossil fuels. In the 'Saudi Vision 2030' Deputy Crown Prince Mohammed bin Salman proposed changes to generate $100 bn in additional non-oil revenue by 2020. In order to do that, the 30-year-old monarch plans to restructure Saudi Aramco, the state oil company. Less than 5% of Aramco’s stake would undergo an initial public offering, with an expected value of $2 trillion. The ownership of the rest to the company would be transferred to Saudi’s sovereign wealth fund, known as the Public Investment Fund (PIF). Prince Mohammed also called for the private sector to grow to 60% from the current 40%. Government services like education, health care and airports will be transferred to the private sector. As the country adjusts to the transition, economic growth is expected to slow as private sector expands.

#Saudi Arabia’s New Economic Reforms: A Concise Explainer

In March Saudi Arabia announced Vision 2030, a comprehensive reform plan aimed to wean Saudi Arabia off its long-term dependence on oil, sooner rather than later. The timing for these reforms is no accident. Large swings in global oil prices affect Saudi Arabia deeply, as the country’s oil export revenue stream determines its own financial strength. Saudi Arabia also faces other, wider challenges, with implications for the Kingdom have not yet fully been explored, such as its political succession.

Guidance Capital Markets closes $50m #sukuk issuance for Al Bayan group

Guidance Capital Markets announced it closed a three year Sukuk issuance for the Saudi Arabian conglomerate Al Bayan. The USD denominated Sukuk was issued last week through a private placement with three GCC banks, and was led by Guidance, who also acted as financial advisor to Al Bayan. The issuance is one of the first transactions of its kind, where a private conglomerate in KSA closed a USD dollar Sukuk through a private placement.

#Saudi banks Jazira, Bilad planning local #sukuk issues

Bank Al Jazira will meet local fixed income investors this week for a sukuk sale which will improve its Tier 2. The transaction will likely run for ten years but includes an option to redeem the sukuk after five years. It is being arranged by GIB Capital, as well as the bank's own investment banking arm. Bank Al Bilad has chosen HSBC's Saudi Arabian arm to arrange its own Tier 2-enhancing sukuk issue. According to their respective financial statements, Bank Al Jazira's CAR was 15.83% at the end of 2015. At the same point, Bank Al Bilad's CAR was 15.88%.

IRTI #Conference Discusses Poverty Alleviation through Islamic #Microfinance

The Islamic Research and Training Institute (IRTI) is organizing a seminar to discuss the role of Islamic microfinance in poverty alleviation on 14-15 May 2016 in Bogor, Indonesia. IRTI is organizing the event in conjunction with the 41st Annual Meeting of the IDB Group. The event features the launching of the Islamic Microfinance for Poverty Alleviation and Capacity Transfer (IMPACT) Program, which aims to disseminate the best practices in Islamic microfinance.

Saudi Sipchem to recall #sukuk before maturity -bourse filing

Saudi International Petrochemical Company (Sipchem) plans to recall a sukuk maturing on July 6 three weeks early. The firm will send a notice to sukuk holders informing them of its intentions and will use available cash to pay it off. It originally issued 1.8 billion riyals of sukuk in 2011. Sipchem also plans to issue a new sukuk and appointed Riyad Capital and NCB Capital as lead managers for the issue.

Putin-Ally Kadyrov Courts Saudi #Investment in #Chechnya

Leader of Russia’s Chechen Republic, Ramzan Kadyrov, is courting investment from Saudi Arabia. Kadyrov received a Saudi delegation in St Petersburg over the weekend, during which he discussed increasing the partnership between Chechenya and Riyadh. In January Kadyrov announced he is looking to open an Islamic bank, in order to attract investors from the United Arab Emirates and the Gulf.

SAMA to obtain FATF full membership in June '18

Saudi Arabian Monetary Agency (SAMA) is expected to obtain a full membership at the Financial Action Task Force (FATF) in June 2018. At the 8th Compliance & Anti Money Laundering Seminar in Saudi Arabia SAMA Vice Governor Abdulaziz Al-Furaih said several new assessments have emerged including the set of recommendations by FATF and the MENA Financial Action Task Force (MENA FATF). Thomson Reuters Managing Director Nadim Najjar noted that compliance costs are set to increase in 2016.

AAOIFI Convenes its International #Conference Tomorrow in Madinah, Marking its 25th Anniversary

Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) holds on 4 May 2016 its International Conference, marking its 25th anniversary. Dr. Hamed Hassan Merah, Secretary General of AAOIFI said time is proper to revisit the 40 years history of the Islamic finance industry to evaluate its experience and contemplate the way forward.

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