The Asset

ESG progress faster than investors’ expectations, says PRI #China country head

According to Luo Nan, China country head at The Principles for Responsible Investment (PRI), the country faces immense challenges in pushing the environmental, social and governance (ESG) programme. Still, ESG is fast becoming a well-known concept. 2016 was a big turning point, when China released the "Guidelines for Establishing the Green Financial System". The China Securities Regulatory Commission has set out a timetable which will require all listed companies to mandatorily disclose environmental information by 2020. There is increased awareness and interest from investors in relation to the Principles for Responsible Investment. There is also an increasing volume of jobs available in China relating to ESG. Luo Nan believes that communication to the public and broader education among investors are key to developing the broad ESG programme in China. Evidence on risk and consequent implications for investors need to be much better developed and communicated.

What's driving #sukuk activity in #Indonesia?

Indonesia's sukuk market is thriving. The Southeast Asian nation raised US$2.5 billion from its sale of US dollar Islamic bonds in March, snatching orders for over three times the amount offered. It was the biggest ever Asian US dollar sukuk offering. Indonesia’s government is speeding up investment in roads and railways amid pressure from President Joko Widodo. Even with a reduced allocation this year, Indonesia’s Public Works Ministry has spent a bigger proportion of its budget in the first half compared with 2015.

Asset management, sukuk to spur growth in Islamic finance

The US$2 trillion Islamic finance industry has grown rapidly over the past decade fueled in part by a robust sukuk market and a growing Islamic asset management industry. Going forward, Islamic finance is expected to grow in response to expanding economies in countries with a growing Muslim population and amid increasing demand for Shariah-compliant investments. On Thursday February 18, the Islamic Finance Summit took place in the city of Jakarta. The summit discussed highlights of the past year as well as offered glimpses of what’s ahead. Participants of the summit also heard Indonesia’s plans for developing Islamic finance.

IFC launches second sukuk to support MENA projects

The International Finance Corporation (IFC), a member of the World Bank Group, announced on September 10 that it issued a US$100 million trust certificates through a special purpose vehicle, IFC Sukuk Company, in an effort to spur growth in developing economies. The five-year Sukuk will support IFC’s developmental financing activities in the Middle East and North Africa (MENA), and other parts of the world. It will initially be listed on NASDAQ Dubai. An application has also been made to list the Sukuk on the London Stock Exchange. The sukuk were based on the al Wakala structure. Joint Lead Managers of the deal were Dubai Islamic Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered Bank (B&D).

EIIB-Rasmala closes USD100 million sukuk programme for insurance group

The EIIB-Rasmala has closed the second tranche of FWU Group’s US$100 million sukuk al-wakala programme. The second tranche of the programme has closed for US$40 million. The former is acting as the lead arranger and bookrunner for FWU’s sukuk al-wakala programme. The FWU sukuk has been assigned the investment grade credit rating BBB- by Fitch and is being issued in amortizing tranches, each with a term of five years. The first tranche of the programme previously closed for US$20 million in October 2013. Distributions are made quarterly to investors on a fully amortizing basis and the profit rate is 7% per annum. The sukuk will fund, in a fully Sharia’a-compliant manner, a set of retakaful transactions for one of FWU’s five main subsidiaries, Atlanticlux.

Islamic social funds could potentially meet shortfalls to alleviate poverty in Asia, says Thomson Reuters

Thomson Reuters has released the Islamic Social Finance Report 2014 in collaboration with the Islamic Research and Training Institute (IRTI). The report is the first of its kind study covering Islamic social finance across countries in South and Southeast Asia with sizeable Muslim populations including Indonesia, India, Pakistan, Bangladesh, Malaysia, Singapore and Brunei Darussalam. According to the report, Islamic social funds could potentially meet resource shortfalls to alleviate widespread poverty in those countries. The potential of Islamic social funds remains unrealized as actual Zakah and returns of Awqaf are not fully utilized in most countries. Additionally, there is no Islamic microfinance industry in most countries, which further diminishes the optimal potential of Islamic social finance.

AmIslamic Bank to issue first Basel III-compliant sukuk

AmIslamic Bank has obtained approval from the Securities Commission Malaysia to establish a subordinated sukuk murabaha programme of up to 3 billion ringgit (US$903.60 million), which would represent the first Basel III-compliant sukuk in Malaysia. AmIslamic is given the flexibility to issue subordinated sukuk murabaha during the availability period of the programme based on the bank's funding requirements. The AmIslamic programme has a tenor of up to 30 years from the date of the first issuance of the subordinated sukuk murabaha. Each tranche to be issued shall have a tenor of at least three years, subject to their maturing on or before the expiry of the programme. AmIslamic's sukuk murabaha is rated AA3 by RAM.

FWU Group closes first tranche of USD 100 million sukuk programme

European based multinational insurance group FWU Group has now closed the US$20 million first tranche, which was oversubscribed, of its US$100 million sukuk al-wakala programme. This transaction is a securitization of takaful (Sharia'a-compliant) insurance policies and provides an opportunity for investors to participate and invest in sukuk certificates backed by Atlanticlux Lebensversicherung, a BBB rated, multinational insurance provider. The sukuk has been assigned an investment grade credit rating by Fitch and will be issued in amortizing tranches, each with a term of five years, and an average life of about 2.5 years. Distributions will be made quarterly to investors on a fully amortizing basis and the profit rate is expected to be 7.00% per annum.

GBSA names new chair, launches regional initiatives

The Gulf Bond and Sukuk Association has named a new chair of its steering committee and announced the creation of a sub-committee to promote asset management within the region. Giambattista Atzeni has replaced Andrew Dell as a new chair of the GBSA steering committee for 2013.

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