Sukuk

COVID-19 to impact GCC #sukuk issuance in 2020

According to rating agency Moody’s, Islamic finance is set to keep expanding in 2020 and beyond as the GCC countries and Malaysia help drive growth in Shariah-compliant financial products. Moody’s VP-Senior Credit Officer Nitish Bhojnagarwala expects sukuk issuance to remain stable at around $180 billion this year and the takaful insurance market will see steady growth. He added that downside risks are also rising because of the coronavirus outbreak, as prolonged market disruption could dissuade issuers from coming to market. The rating agency expects flat growth in total global issuance this year after a 36% rise in 2019 to $179 billion. Islamic banking penetration in the core Islamic financial markets of GCC, Malaysia, Indonesia and Turkey, increased to 31.2% in September 2019, from 25.5% in 2013.

Moody's expects $180bn #sukuk issuance this year

According to Moody's Investor Service, sukuk issuance will stabilise after growing for four consecutive years, supported by the deficit financing needs of some GCC sovereigns, amid weaker oil prices and higher sukuk refinancing. Moody's expects sukuk issuance of around $180bn in 2020, after a 36% rise in 2019 to $179bn. Global sovereign sukuk issuance increased by 31% to $119bn in 2019, from $91bn in 2018. Moody's noted that downside risks are rising in the short term because of the fallout from the coronavirus outbreak, as prolonged market disruption could dissuade issuers from coming to market. Green sukuk will benefit from robust growth in institutional investor demand for environmental, social and governance (ESG) products, given the natural crossover of sustainable investing and Islamic finance.

#Sukuk issuance stalls on subdued economy

Sukuk issuance could potentially take a hit this year, dragged by subdued economic growth. In 2018, when Malaysia’s GDP growth slowed to 4.7%, sukuk issuances fell by 2.6%. In 2019, when real GDP growth moderated further to 4.3%, sukuk issuances slipped by 2.3%. However, the current low interest-rate environment will prevent sukuk issuances from falling too significantly this year. According to Malaysia Rating Corp (MARC) chief economist Nor Zahidi Alias, the downside risk remains especially if the Covid-19 outbreak continues to be unmanageable and lockdown periods across global economies continue. Policymakers globally are using fiscal and monetary tools to soften the impact of the Covid-19 outbreak. The US Federal Reserve’s move to lower its benchmark to a near-zero rate prompted central banks across many sukuk active markets to cut their interest rates.

Saudi based Alinma Investment stuns the market with their Sukuk Bond ETF launch

Alinma Investment has recently launched its Sukuk Bond ETF in order to provide a low risk investment vehicle for the end investor. The world is currently awash with volatility and there has never been a better time to reap the benefits of a well-diversified multi-asset model portfolio. Until the recent launches of Sukuk Bond ETFs, it had proven very difficult to construct a Model Portfolio for GCC based investors, but this is no longer the case and it is not out of the question that this opening up of the Saudi Arabia Government Bond market could prove a key step going forward for other investors outside of the region. Alinma’s stunning ETF launch has more than a USD300 million in seed, so this fund is already large enough to be used by institutional investors across the globe.

ISDB, LSE Plc Partner To Boost Green #Sukuk

The Islamic Development Bank (ISDB) and the London Stock Exchange Plc (LSE) have both pledged to partner to boost Green Sukuk globally. President of the ISDB, Dr. Bandar Hajjar, met with the CEO of the LSE Plc, Nikhil Rathi, to discuss ways of broadening their collaboration. Green Sukuk has recently emerged as a unique example of a Sharia-compliant impact investing instrument with strong growth prospects. According to the Climate Bonds Initiative, a total of $117.8 billion in green bonds and Sukuk were issued in the first half of 2019, up 48% year-on-year. The Climate Bonds Initiative has also identified the following eligible assets for green Sukuk: solar parks, biogas plants, wind energy projects, renewable transmission and infrastructure projects, and electric vehicles. Equally, they can be used to subsidize a government's green payments.

Dubai Islamic Postpones #Sukuk Amid Coronavirus Volatility: Sources

Dubai Islamic Bank (DIB) has postponed a planned issuance of U.S. dollar-denominated sukuk due to market conditions resulting from the new coronavirus outbreak. DIB was planning to raise the financing on Feb. 26, but decided to wait for better market conditions. The potential deal received a good response from investors while it was being marketed, but volatility in the debt markets as the coronavirus outbreak intensifies would have increased the sukuk profit rate. All the Gulf countries except Saudi Arabia have reported cases of the new coronavirus, many in people who had been to Iran, where 54 people have died from the virus and 978 have been infected.

Nasdaq Dubai welcomes listing of $2 billion Sukuk by Islamic Development Bank

Nasdaq Dubai welcomed the listing of a US$2 billion Sukuk by the Islamic Development Bank (IsDB). The sukuk was priced at a profit rate of 1.809 percent payable on semi-annual basis. This Sukuk makes IsDB the leading Sukuk issuer by total value on Nasdaq Dubai at $15.64 billion. The first of IsDB’s 12 current Sukuk listings on the exchange was a $1 billion instrument that listed in 2015. The other IsDB listings are three Sukuk of $1.5 billion each, a $1.3 billion Sukuk, four Sukuk of $1.25 billion each, a EUR650 million Sukuk and a EUR1.1 billion Sukuk.

Sukuk Islamique: La Côte d’Ivoire remboursera une dette de 19 milliards de fcfa le 7 mars

L’Etat de Côte d’Ivoire procédera le 7 mars 2020 au paiement des profits semestriels et au remboursement partiel du capital de son Sukuk Etat de Côte d’Ivoire 5,75% 2016-2023 pour un montant global net d’impôt de 18,488 milliards de FCFA (27,732 millions d’euros). Les profits s’élèvent à 3,488 milliards de FCFA et le principal à 15 milliards de FCFA. L’Etat ivoirien avait lancé durant la période du premier au 31 août 2016 un appel public à l’épargne le sur le marché financier de l’Union monétaire ouest africaine (UMOA), pour un montant de 150 milliards de FCFA (225 millions d’euros). Le montant levé était destiné au financement de projets de développement économique et social de la Côte d’Ivoire.

Dubai Islamic Bank hires banks to arrange dollar #sukuk issuance - document

Dubai Islamic Bank has hired regional and international banks to arrange a potential long five-year or seven-year dollar sukuk issuance. The bank hired Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, ICBC, KFH Capital, Sharjah Islamic Bank and Standard Chartered Bank to lead the potential Islamic bonds sale. They will arrange an investor call on Thursday and investor meetings in London on Tuesday.

Islamic Development Bank starts marketing dollar #sukuk

Saudi Arabia’s Islamic Development Bank began marketing a five-year dollar sukuk at high-40s basis points over mid-swaps. The bank has hired Citi, Dubai Islamic Bank, HSBC, Islamic Corporation for the Development of the Private Sector, LBBW, Natixis and Standard Chartered Bank to arrange the potential debt sale. The issuance is under Islamic Development Bank’s $25 billion trust certificate issuance programme and is expected to be of benchmark size. Benchmark size generally means upwards of $500 million.

More hope for #sukuk market growth: S&P

Global Sukuk issuances witnessed a 25.6% hike last year from 2018 numbers, with foreign currency issuances leaping 20.8%. This was driven by high levels of liquidity in Indonesia, good performance in Malaysia, Turkey's efforts to tap all available financing sources and the return of some GCC issuers to the market. According to S&P, total Sukuk issuance for 2020 is expected to reach $160 billion-170 billion this year, including $40 billion-$45 billion of foreign currency issuance. The research and ratings agency added that ample global liquidity and negative yields on more than $10 trillion of debt mean that issuers with a good credit story will find relatively easy entry to the Sukuk market this year. S&P pointed out several global themes that bode well for Islamic finance, technological innovation, sustainable investments and diversification, will continue to open the market to new players particularly small and midsize issuers.

Saudi Arabia's Riyad Bank starts marketing 10-yr dollar #sukuk

Saudi Arabia’s Riyad Bank has started marketing 10-year dollar sukuk at around 225 basis points over mid-swaps. The Tier 2 subordinated sukuk sale is part of a $3 billion issuance programme. The bank hired JPMorgan, Riyad Capital and Standard Chartered to lead the deal. First Abu Dhabi Bank and HSBC are also involved in arranging the potential debt sale.

Riyad Bank planning USD #sukuk under new programme

Saudi Arabia's Riyad Bank is planning to issue an international Tier 2 U.S. dollar sukuk under a new programme. Funds raised from the first issuance under the new programme will diversify the bank's sources of finance, strengthen its capital base, support the expansion of its credit business and other activities. Riyad Bank has mandated J.P. Morgan, Riyad Capital, Standard Chartered Bank, First Abu Dhabi Bank and HSBC as joint lead managers for the upcoming sukuk. Fitch rated the sukuk programme BBB+(EXP)'/'F2(EXP).

Stronger GCC appetite set to spur uptick in #sukuk issuance in 2020

A stronger appetite for sukuk issuance in some GCC countries is among the key factors that promise to spark an uptick in the market. S&P Global Ratings estimates a total sukuk issuance of between $160 billion and $170 billion this year, representing 5% growth on the $162 billion seen in 2019. The total estimated issuances include $40 billion-$45 billion of foreign currency sukuks. The expected upswing in sukuk issuances will be underpinned by high levels of liquidity in Indonesia, Turkey's efforts to tap all available financing sources, and the good performance in Malaysia. The green sukuk market will continue to expand, aided by opportunities related to energy mix diversification in the GCC/Malaysia and investor diversification. As GCC countries begin their transition toward less carbon-intensive economies, green projects are set to flourish. Some of these projects will likely be funded via the sukuk market.

#Bahrain's GFH hires banks to market five-year dollar #sukuk

Bahrain-based GFH Financial Group has hired Societe Generale and Standard Chartered to act as global coordinators and joint lead managers for the issuance of five-year dollar sukuk, The banks will market the bonds through a series of meetings starting on Jan. 15 in Asia, the United Arab Emirates and London. Emirates NBD Capital, KAMCO Investment, Mashreqbank, SHUAA Capital and Warba Bank will also serve as joint lead managers.

#Bahrain's sovereign wealth fund Mumtalakat hires banks for dollar #sukuk

#Bahrain’s sovereign wealth fund Mumtalakat has hired banks to arrange fixed income investor meetings ahead of a potential issue of U.S. dollar-denominated sukuk. The fund has picked Citi, Gulf International Bank, HSBC, National Bank of Bahrain and Standard Chartered for meetings in London, Asia and the Middle East. The deal could be the first international debt sale by a Gulf borrower this year. Mumtalakat raised $600 million in sukuk last year, having obtained orders of around $4 billion for the debt sale.

Islamic Development Bank issues 1 bln euros in debut green #sukuk

On November 27 the Islamic Development Bank (IDB) raised 1 billion euros in green sukuk. The 5-year sukuk was raised under IDB’s $25 billion sukuk programme and was priced at a profit rate of 0.037%. Proceeds from the issue will be channeled to climate change and green projects in IDB's 57-member countries. These include projects for renewable energy, clean transportation, energy efficiency, pollution prevention and control, environmentally sustainable management of natural living resources and land use and sustainable water and wastewater management. The joint lead managers and joint bookrunners for the sukuk were Citi, First Abu Dhabi Bank, HSBC, Landesbank Baden-Württemberg, Natixis, Société Générale, Warba Bank, and Standard Chartered Bank.

#Oman hires local banks for domestic #sukuk programme

Oman has hired local lenders Bank Muscat, Bank Nizwa and Alizz Islamic Bank to set up a sukuk issuance programme. It plans to issue five-year and seven-year Omani rial denominated sukuk, which will be open for subscriptions starting from Monday until Dec. 8.

Wethaq launches first ‘fintech’ #Sukuk on its market infrastructure using SWIFT gpi Link

UAE-based fintech company Wethaq has issued the first pilot sukuk on its securities market infrastructure. Al Ghurair Investments acted as the issuer advised by Mashreqbank acting as lead arranger, R3 as protocol provider, Clifford Chance as legal counsel and the Dubai Islamic Economy Development Centre as mentor. Wethaq’s fintech infrastructure is developed on R3’s Corda Protocol integrating SWIFT global payments innovation, gpi Link platform. By using the gpi Link, Wethaq will be able to seamlessly integrate SWIFT’s gpi service into its platforms, opening itself up to more than 3,500 banks around the world. SWIFT gpi Link is a gateway to interlink ecommerce and trading platforms and enables a fast, secure and transparent settlement.

Dubai Islamic Bank issues $750 mln #sukuk

UAE’s largest standalone Islamic bank has just closed a $750 million sukuk. Dubai Islamic Bank’s 5-year $750 million sukuk sold with a a profit rate of 2.95% and is the bank’s second $750 million sukuk this year. The first was an additional Tier 1 perpetual non-call 6-year sukuk with a profit rate of 6.25% per annum. The bank's lates sukuk attracted orders in excess of $2 billion, representing an oversubscription rate of 2.7 times. Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, Maybank, Sharjah Islamic Bank, Standard Chartered Bank and Warba Bank acted as Joint Lead Managers and Bookrunners on this transaction. The Islamic Corporation for the Development of the Private Sector acted as a Joint Lead Manager and Kuwait International Bank acted as a Co-manager.

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