Sukuk

#Saudi Arabia's order books at about $25 billion for debut dollar #sukuk - sources

The order books for Saudi Arabia's debut U.S. dollar-denominated sukuk have reached about $25 billion. The dual-tranche sukuk is set to be the largest ever Islamic bond, beating a $4 billion sukuk issued by Qatar in 2012. The two tranches have maturities of five and ten years. The initial price guidance put the senior unsecured Islamic bonds in the 115 bps over mid-swaps area for the five-year tranche and 155 bps over mid-swaps area for the 10-year tranche.

SECP easing #Sukuk rules to facilitate Islamic finance

The Securities and Exchange Commission of #Pakistan (SECP) announced that it was relaxing regulations for Sukuk issuance in order to develop the Shariah-compliant market. The regulator said the SECP was amending the 2015 Issue of Sukuk Regulations to facilitate the issuers, reduce the cost of issue and ease the regulatory burden. The SECP has invited public opinion on the proposed amendments before their finalisation. The commission has also advised the PSX to come up with proposals for reducing the cost of market-maker for Sukuk issuance, rationalising the minimum size of public offer portion to reduce the cost of issue and organising a seminar with potential issuers to widen awareness. According to the SECP, the Sukuk market has been performing below potential in Pakistan. While the demand is substantial, supply remains short.

#Malaysia Remains Biggest #Sukuk Market as Record Number of Global Corporates Tap Sukuk

Global sukuk market resumed positive strides in 2016 after three years of consecutive decline. The sukuk market also witnessed an important shift where corporate issuers dominated the market in 2016 with USD47.3 billion volume of issuance, representing a share of 63.2%. This is in contrast to historical trends where issuance was driven largely by sovereigns. Overall, sukuk issuer profile remained similar to historical trends. Malaysia continued to be the main driver for sukuk issuance, commanding a market share of 46.4% of total issuances, followed by Indonesia and the United Arab Emirates (UAE), accounting for 9.9% and 9.0% share. Elsewhere, Turkey recorded a notable rise in sukuk issuance at USD4.1 billion for the year, supported by a number sovereign issuances with maturity ranging from one to five years. The year 2016 also witnessed issuances from Senegal, Jordan, Ivory Coast and Kuwait.

#Saudi readies debut dollar #sukuk with US risk disclosure

Saudi Arabia has included a disclosure on credit risk retention requirements in the prospectus of a debut dollar sukuk which is expected to issue this week and could total $10 billion. The disclosure to comply with the US Dodd-Frank Act has not been made for other sovereign sukuk issues. The US retention rule was set to align the interests of issuers of asset backed securities (ABS) with those of ABS investors by asking the sponsor of an ABS securitisation. Sukuk are generally asset-based, but in order to comply with the rules, Saudi Arabia will purchase at least 5% of the aggregate principal amount of each tranche it issues. Saudi Arabia began meeting investors on Sunday ahead of the deal, the second debt sale by the kingdom, which made its debut in the international debt markets last year with a record $17.5 billion bond.

Sovereign plans #sukuk blockbuster

Saudi Arabia is expected to raise several billion US dollar sukuk across five and 10-year tranches. The notes will be in a hybrid mudaraba-murahaba format, a structure in essence already trialled by Saudi Aramco for a riyal-denominated sukuk. The kingdom is rated A1 by Moody's and A+ by Fitch. The banks running the deal are BNP Paribas, Citigroup, Deutsche Bank, HSBC, JP Morgan and NCB Capital. The national oil company Saudi Aramco raised SR11.25bn riyals in order to diversify its revenues impacted by low international oil prices. The floating rate local currency sukuk has a seven-year maturity and offers 25bp over the six-month Saudi Arabian Interbank Offered Rate.

Jaiz Bank anxious to invest massively in #Sukuk for infrastruture

In #Nigeria Jaiz Bank has accumulated funds and is now ready to massively invest in Sukuk to finance in specific infrastructure projects in the country. Managing Director Hassan Usman said that the bank, being an Islamic bank, could not invest in interests yielding instruments and therefore had to wait until Sukuk was ready. He added that there are off-shore funds held by those who share similar non-interests philosophy of Jaiz Bank which could be brought into the country. Usman said that from a capital base of N5 billion, the bank has grown its capital base to about N50 billion. From a deposit of N3. 5 billion, it has grown to about N60 billion. From the initial three branches as a Regional Bank, Jaiz Bank has grown into a National Bank with 30 branches across the nation.

Growing #demand for #fintech in #Islamic #finance

The IFSB sees growing demand for fintech within the Malaysian Islamic financial services system, because customers are looking for alternatives.
IFSB secretary-general Jaseem Ahmed said „demand for fintech within Islamic finance had increased following the global financial crisis“ and further that “There are tremendous opportunities for fintech within Islamic finance. In the aftermath of the global financial crisis, there has been a loss of confidence, so people are looking for alternatives,”
Jaseem added that commercial banks are really taking up fintech to reach out and improve the attractiveness of their products at a lower cost and also said that he expected sukuk issuance to continue remaining strong in Malaysia.
The IFSB event, which ends tomorrow, comprises forums that bring together key stakeholders of the Islamic financial services industry.

#Aramco Plans to Raise #$3 #Billion in #Sukuk Sale

Saudi Aramco has plans that would raise 11.25 billion riyals (3 billion US-Dollar) from its debut Islamic bond. That would boost the size of the sale because of investor demand. King & Spalding Partner Rizwan Kanji weighs in on "Bloomberg Markets: Middle East."

Treasury targets billions through #Sukuk #securities

The Kenyan Treasury will push through the country’s first Sukuk bond in the coming year. The changes will see the Public Finance Management Act amended to allow the issuance of the bond, which has been in the works since 2014.
Treasury CS Henry Rotich said that the Capital Markets Act, the Co-operatives Societies Act and Sacco Societies Act are also lined up for ammendment.
The government plans to borrow up to Sh256 billion from external sources in the next fiscal year, to plug a budget deficit of Sh524 billion. The State has in the recent past taken up foreign loans in form of the Eurobond and syndicated loans from commercial lenders. Kenya has been mulling over a Sukuk bond for the past two fiscal years, given its highly discounted nature, which would provide cheaper financing compared to commercial loans. The lack of the necessary regulatory framework has, however, delayed this option. In the current fiscal year, Kenya has turned to syndicated loans to finance part of her budget deficit. These loans include the just signed $800 million loan from four international banks, and a similar $500 million facility taken from the African Export-Import bank.

Shareholders at #Qatar's Masraf Al Rayan approve #sukuk #issuance for up to $2bln

The shareholders of Qatar's Masraf Al Rayan, an Islamic lender, approved the issuance of sukuk worth up to $2 billion to meet the bank's liquidity needs on Sunday. The Gulf state's second largest lender by market value appointed banks in January to handle a debut sukuk issue of around $500 million, banking sources told Reuters that month.

MIDEAST DEBT-#Saudi Aramco pays premium in debut #sukuk sale

Saudi Aramco is paying a significant premium to the government and to its previous borrowing in its first sukuk sale. Aramco is offering 7-year, riyal-denominated sukuk at 25 basis points (bps) over the six-month Saudi Arabian Interbank Offered Rate (SAIBOR). The private placement, part of a 37.5 billion riyal ($10 billion) Islamic bond programme, could be as large as about 6 billion. It is expected to take place early next week. Riyadh is restructuring the company and its regulatory environment to make Aramco attractive as an investment. But major decisions on the company's structure and its post-IPO dividend policy have not been announced. Alinma Investment, HSBC Saudi Arabia, NCB Capital and Riyad Capital are the joint lead coordinators. They are joined by GIB Capital, Samba Capital and Saudi Fransi Capital in dealer roles.

#Saudi Arabia considering changes to debut dollar #sukuk structure -sources

Saudi Arabia is considering whether to change the structure of its planned U.S. dollar sukuk issue, which would be the kingdom's first international sukuk issue. The structure would comprise a mudaraba agreement plus a murabaha facility. Potential changes to that structure are now under discussion to make the instrument more easily tradable and less complex to understand for international investors. So the structure may be changed to an ijara format, a lease-financing structure which is common among sovereign sukuk issuance around the world. The new issue would be Saudi Arabia's second international bond sale after a $17.5 billion debut conventional bond issue last October. Citi, HSBC and JP Morgan are global coordinators, BNP Paribas and Deutsche Bank are also involved with lead roles.

Dubai's Drake & Scull breaches covenants on #sukuk, other bank facilities

Dubai-based building company Drake & Scull said it breached financial covenants in relation to a sukuk syndicated facility and other bank facilities in 2016. The company incurred an annual loss 815.3 million dirhams ($222.01 million) last year as low oil prices and an economic slowdown hit the construction sector in the Gulf region. Drake & Scull was not able to comply with reporting requirements requested for a conditional waiver and therefore, breached financial covenants. These loans are now overdue on their principal and interest payments, and they are technically payable on demand.

Saudi Aramco to Price Islamic #Bond in $10 Billion Debt Push

Saudi Arabian Oil Co (Aramco) set final pricing for its debut Islamic bond as the company presses ahead with plans to raise $10 billion in debt. Aramco is selling debt with a seven year tenure in a private placement at 25 basis points over the country’s interbank offered rate. The oil giant is selling debt ahead of an initial public offering in 2018 as the country’s finance ministry plans to cut taxation on the company. The cut will boost Aramco’s net income by 300%, putting per-barrel income in a range similar to that of international oil companies. Aramco’s sukuk follows Saudi Arabia’s $17.5 billion bond issue in October, which was the state’s debut international debt sale. Saudi Arabia is also said to be planning a sale of riyal-denominated Islamic bonds to local institutions to help boost the country’s Islamic bond market.

Deadline for comments on #AAOIFI #Sukuk Exposure Draft set for 31 March

The Auditing Organisation for Islamic Financial Institutions (AAOIFI) has published the exposure draft of the accounting standard on Sukuk and invites feedback from the Islamic finance industry. The objective of the standard is to prescribe the accounting and financial reporting guidance for the accounting treatment and classification with regard to the Sukuk issuance. It also covers the presentation and disclosure of Sukuk issuance. It provides principle-based accounting treatments for broadly two types of Sukuk issuance, off balance sheet and on balancesheet as well as respective subcategories. Comments on the exposure draft are welcome and should be directed no later than 31 March 2017 to accounting@aaoifi.com. Comments and suggestions will be presented in an upcoming meeting to discuss and make necessary changes to the standard.

#Turkey's grain board TMO, Gap Insaat to sell debut Islamic #bonds

Turkey's state grain board TMO and construction firm Gap Insaat have received regulatory approval for debut sukuk sales. Turkey has seen steady issuance of sukuk from the government and the country's Islamic banks, but an increase in corporate issuance could help tap into a much wider stable of issuers. According to the country's Capital Markets Board, the TMO will raise 150 million lira ($41.6 million) via a sukuk that will be arranged by Islamic lender Kuveyt Turk. Turkey is seeking to build a bigger role in the industry and forge closer ties with fast-growing economies in the Gulf and southeast Asia. The Turkish Treasury hired banks to arrange a sale of sukuk in the international markets, with meetings set to begin this week in the United Arab Emirates.

#Turkish treasury says mandates three banks for #sukuk issue

Turkish treasury mandated the Dubai Islamic Bank, HSBC, and Standard Chartered to explore opportunities for a possible sukuk issue. A series of investor meetings will be organised in the UAE on March 28, 2017. Meanwhile, the country’s monetary authority raised its highest interest rate while leaving all of the other rates unchanged. The lira rallied as the move was seen paving for they way for tighter policy and serving as insurance against bouts of currency weakness.

Islamic finance aims for easier #sukuk investment with proposed new #standards

Two standard-setting bodies are proposing new guidelines for sukuk that would make them more transparent and easier to structure. The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) published draft accounting standards for sukuk. It clarifies how sukuk should be treated on balance sheets and which information issuers should disclose. The AAOIFI said it had also formed a working group to overhaul its sharia standards for sukuk. Last year, the Malaysia-based Islamic Financial Services Board (IFSB) drafted its own guidelines for disclosure related to Islamic capital market products. Aligning the market around common standards and requiring all issuers to disclose the same information could increase investment in sukuk.

CORRECTED-#Indonesian global #sukuk may be issued this week -minister

Indonesia's finance minister Sri Mulyani Indrawati announced the government plans to issue a global sukuk this week. Indrawati did not give further details on the planned issuance. An official has previously said the government will issue global sukuk in the first half of 2017. According to Thomson Reuters, Indonesia has given initial yield guidance of 3.75% for a five-year tranche of the U.S.-dollar sukuk and 4.5% for 10-year tranche.

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