In a statement to the Tadawul, Bank Aljazira has issued a correction to its financial results for H1 2015. Originally the bank had stated total operating income for Q2 of SAR 612 million. However, after reclassifying gains from the disposal of land, Bank Aljazira says total operating income for Q2 was SAR 1.184 billion. At first the bank had classified the gain of SAR 573 million on the disposal as non-operating income. The gain has now been reclassified as operating revenue on the recommendation of the bank’s external auditors.
Demand for housing in Saudi Arabia is translating into a rush for some of the lowest-rated Islamic debt in the six-nation Gulf Cooperation Council. Three sukuk from Dar Al Arkan Real Estate Development Co are among the five best-performing Shariah-compliant bonds in the region this year. The company’s notes due May 2019 returned 8.2% through July 21, compared with an average 2.1% for the GCC sukuk market. The gains underscore efforts by Saudi Arabia’s King Salman to stoke construction amid an estimated shortfall of 2mn homes. The securities have been helped by a clamour for high-yielding assets as the US Federal Reserve prepares to raise interest rates for the first time since 2006.
The Islamic Development Bank (IsDB) announced that it will increase its funding of SDG related activities through its ten year strategy framework, from $80 billion recorded during the MDGs, to $150 billion over the next 15 years (2016-2030). IsDB made the announcement on the sidelines of the United Nations’ Third International Conference on Financing for Development, in Addis Ababa 13-16 July. Islamic finance can serve as a strong and non-traditional source of financing the Sustainable Development Goals (SDGs) according to global experts speaking during a seminar organised by the IsDB. Johannes Majewski, Program Coordinator, GIZ, the German Corporation extolled the strength of Islamic finance through its emphasis on asset based financing and its focus on common welfare.
Saudi Arabia's Arab National Bank has received regulatory approval to raise 2 billion riyals ($533.28 million)through sukuk which will enhance its supplementary capital. The kingdom's seventh-largest lender by assets will privately place the Tier 2 sukuk with a tenor of 10 years although it allows the issuer to redeem the security after five years. Arab National Bank joins a string of Saudi Arabian banks that have sought to replenish their capital reserves in the last couple of years by issuing capital-boosting bonds and bonus shares following a period of strong lending growth. Capital reserves are high in Saudi Arabia due to the kingdom's conservative regulatory standards.
Struggling to elevate the standard of living among orphans, the Takaful Welfare Society for Orphan Care in Madinah has announced a new project to build residential units for orphans in the holy city. According to the Takaful program, 195 residential units will be built for families of orphans in Madinah and its villages over a period of three years and 300 houses will be repaired. With the cost of around SR40 million, it is estimated that one unit will cost around SR180,000 for construction and SR20,000 for repairs. Besides, the society announced the Madinah Al Munawwara Award for Social Responsibility under the auspices of Prince Faisal bin Salman to support best projects for orphans.
Saudi Arabia's billionaire Prince al-Waleed bin Talal repeatedly invoked the name Bill Gates this week when he pledged his entire $32-billion fortune to charity. He also cited Warren Buffett, who has pledged his wealth to the Gates foundation. The Saudi and the American philanthropists are already collaborating on an effort to eradicate polio, among other things, the prince noted. His foundation, Alwaleed Philanthropies, will focus on empowering women and youths, providing disaster relief, eradicating disease, and bridging cultures both inside and beyond the Arab world. The work will be conducted in communities regardless of religion, a decision the prince defended more than once during his news conference. He described the timeline for his philanthropy as "open-ended".
Saudi Prince Alwaleed bin Talal announced Wednesday his plan to give away his entire fortune in the coming years. Educated in California, Alwaleed is thought to be the 20th-richest person in the world, according to Bloomberg, with a fortune of $30.5 billion. He has pledged to give away even more than that, $32 billion, though no time frame was set. Alwaleed’s charity group, Alwaleed Philanthropies, has worked with the Bill & Melinda Gates Foundation and the Carter Center, founded by Jimmy Carter. Alwaleed cites among his causes: health promotion, electricity to remote villages, building orphanages and schools, disaster relief and empowering women. Some have suggested that his emphasis on charity and women’s rights is a tactic to endear his ventures to Westerners. However, few deny his generosity.
Alinma Tokio Marine Company submitted a request to the CMA to approve its capital increase by way of rights issue valued at SAR 250,000,000. The capital increase will be approved in the Company's extraordinary general assembly meeting, which will be determined by the Company’s board of directors at a later date and should be held within six months from the approval date. CMA's Board of Commissioners has issued its resolution approving Alinma Tokio Marine Company’s capital increase request, which is to be conducted in accordance with the tradable rights framework. The rights issue prospectus will be posted and made available to the public at a later time. Investors should carefully read the prospectus, which includes detailed information on the company, the offering and risk factors.
Saudi Arabian Airlines will take delivery of 50 aircraft from Airbus in the largest aviation deal to be secured via Islamic financing. Airbus announced the deal at the Paris Airshow earlier this month, which includes 30 A320neo planes and 20 A330-300 Regional aircraft worth around $8.2 billion based on list prices. Dubai-based International Airfinance Corporation (IAFC), an Airbus-backed sharia-compliant aircraft leasing fund, will buy the aircraft and lease them to Saudi Arabian Airlines, it said in a statement. IAFC, which exclusively finances Airbus aircraft for clients in the Middle East, Asia and Africa, was launched in June last year with seed capital from Airbus and the Jeddah-based Islamic Development Bank. The fund appointed Dubai-based Palma Capital and Quantum Investment Bank as arrangers to complete the deal, which consists of both equity and debt financing.
Fitch Ratings has affirmed the Islamic Development Bank (IsDB)’s Long-term Issuer Default Rating (IDR)’s at ‘AAA’ with a Stable Outlook. The Short-term IDR has been affirmed at F1+. The trust certificates issued by IDB Trust Services Ltd and guaranteed by IsDB have also been affirmed at ‘AAA’. The ratings reflect its strong capitalisation, high liquidity and low concentration risk compared with other regional multilateral development banks (MDBs). Even though some limits, such as leverage, have been relaxed, the risk framework remains stringent, and IsDB is progressively aligning it with that of other highly rated MDBs, for example through its liquidity policy. However, compared with other ‘AAA’-rated MDBs, provisioning is fairly low given the bank’s exposure to countries experiencing deep political troubles.
Saudi Arabia's National Commercial Bank (NCB) has announced the sale of a capital-boosting Islamic bond, raising 1 billion riyals ($267 million) through a sukuk which will enhance its core capital. The kingdom's largest bank said on Monday the privately-placed sukuk, which would boost its Tier 1 capital, was Basel III-compliant and had a perpetual tenor, although the bank would have the right to call the sukuk on a predefined date. However, it did not disclose the call date in the bourse filing announcing the transaction. JP Morgan and NCB Capital, the investment banking arm of NCB, were the deal's arrangers. NCB joins a string of Saudi Arabian banks that have sought to replenish their capital reserves in the last couple of years, by issuing capital-boosting bonds and bonus shares.
Saudi Binladin Group, one of the kingdom's largest construction firms, has priced an Islamic bond with a 364-day tenor worth 1 billion riyals ($267 million). The transaction, arranged by the investment banking arm of Gulf International Bank and BNP Paribas' Saudi unit, was priced with a profit rate of 2.5 percent. The funds from the issue will reportedly be used to finance costs related to its work at the King Abdulaziz International Airport in Jeddah. Binladin is the main contractor for the project, which aims to increase the airport's capacity to handle 80 million passengers annually by 2035. The terms of the sukuk are the same as those on the company's last Islamic bond offer in July 2013, which was arranged by the same banks.
King Salman has reorganised his cabinet, removed princes from government roles, merged ministries and realigned succession since ascending to the throne in January. Half a year into his reign, Saudi companies have yet to market a single security in 2015, making it the country’s quietest start for Islamic sales in nine years. The inactivity in Saudi Arabia comes as more financial centres seek to compete in the sukuk market. Saudi Arabia is pursuing a $130 billion spending plan to diversify its economy away from oil, and has vowed to invest in major infrastructure projects. King Salman’s changes will impact many areas, especially financial markets. The country’s economy may expand 2.5 per cent this year, after growing at an average rate of 5.4 per cent in the previous four years.
The recent decline in oil prices has sparked expectations that Saudi Arabia may issue domestic sovereign debt this year for the first time since 2007. Much of this debt would probably be long term and would be bought by the country’s banks. Sovereign debt issuance would create another benefit for potential corporate issuers by helping create a pricing benchmark. Another factor that is likely to spur Saudi sukuk issuance in the medium term is the Capital Market Authority’s plan to reform the corporate debt market, including measures to make regulatory approval of debt products easier. The main factor likely to slow or limit sukuk growth is higher initial costs compared to other forms of borrowing.
Saudi Arabia's Al Othaim Real Estate and Investment Co, owner of five shopping malls in the kingdom, has revived plans to issue a debut local currency Islamic bond, probably after the summer. The firm has picked the investment banking arms of Banque Saudi Fransi, Gulf International Bank and National Commercial Bank as lead arrangers for the riyal-denominated bond. Timing is now centred on issuing after the summer, as activity in the Saudi capital markets slows down for the holy month of Ramadan, expected to start later this month, and then the long summer break away from the desert heat. After a slow start to the year, sukuk issuance in the riyal-denominated market has picked up in recent weeks.
SEDCO Holding Group, a Shariah-compliant private wealth management organization, acquired 40% in AlShiaka, the Saudi men’s outfitters specialized in designing and making men’s thobes. Anees Moumina, CEO of SEDCO Holding Group, and Walid Al Andijani, AlShiaka’s CEO, sealed the deal in Jeddah at one of AlShiaka’s outlets on June 1st 2015. The partnership will utilize SEDCO Holding’s capital and expertise in corporate governance to drive the strategic growth of the company. This investment is in line with SEDCO Holding’s strategic approach to invest in viable new ventures in growth sectors in the region. AlShiaka now has 32 showrooms for retail purchasing and this has positioned the company’s market share within the top three among its competitors.
Middle East fund managers have on balance become bearish on the region’s biggest stock market, Saudi Arabia, after oil’s rally ran out of steam and the Kingdom confirmed strict rules on foreign investment, a monthly Reuters survey shows. The survey of 15 leading investment firms, conducted over the past 10 days, shows none expects to raise its equity allocation to the Middle East in the next three months — the first time this has been recorded since the survey was launched in September 2013. The proportion intending to cut equity allocations has risen to 20 percent from 7 percent. Also, falling trading volumes and thin corporate news flow indicate that markets are already slipping into a summer lull.
As Saudi Arabian authorities prepare to open the stock market to direct foreign investment this month, they're laying plans for a fresh set of reforms: measures to expand and energise the corporate debt market. The Capital Market Authority wants to change things under a five-year strategy that would encourage issuance of sukuk and conventional bonds as alternatives to bank loans, which currently dominate corporate fund-raising. This would spread corporate risk beyond the banking system, making the financial sector more healthy, and provide more channels for Saudi Arabia's growing investment industry. The CMA plans to introduce rules for credit rating agencies in September and is developing guidance for special purpose vehicles.
Saudi Binladin Group has begun marketing a 364-day sukuk issue to local investors in the kingdom which could raise up to one billion riyals ($265 million) for the construction firm. The transaction is being managed by BNP Paribas' Saudi unit and the investment banking arm of Gulf International Bank. Funds from the deal will be used to finance costs related to its work at the King Abdulaziz International Airport in Jeddah. The last time Binladin Group was in the bond market was in July 2013, when it sold a 1bn riyal 364-day sukuk, which carried a profit rate of 2.5 per cent. That transaction was arranged by the same two banks appointed for the current issue.
Saudia Arabia’s Al Khozoma Management Company is conducting a feasibility study to develop a Sharia-compliant resort in the Maldives. Some 4,120 holidaymakers from the Middle East visited the Maldives this year, representing a market share of 3.7 percent. In January 2014, the ADK company in association with Turkish hotel giant Caprice Gold announced plans to build the first Islamic resort in the Maldives. The five-star, 673-room resort was to be built on Shaviyani Atoll Gaakoshibee. However, the two companies reportedly cancelled the agreement late last year.