Sukuk

#Kazakhstan eyes sovereign #Sukuk, central Sharia board

Kazakhstan plans to issue sukuk in the coming months as part of its efforts to develop Islamic finance in the country. Alibek Nurbekov, head of the Islamic finance at the Astana International Financial Center (AIFC), said the final legislative changes to allow issuance of sovereign sukuk were nearly complete. Issuance of sovereign sukuk is planned in the first half of 2018 in total up to $300 million dollars. The sale would follow sukuk issued by the Development Bank of Kazakhstan in 2012, a deal that raised 240 million ringgit ($61.51 million) via the Malaysian market. Nurbekov added that a central sharia board would be established in the first half of the year, while rules covering Islamic insurers and a fund for Islamic endowments are also planned.

Saudi Dar Al Arkan Real Estate hires banks ahead of 5-year dollar #sukuk deal

Dar Al Arkan Real Estate Development has mandated banks to arrange investor meetings ahead of a planned U.S. dollar five-year sukuk offering. If the deal goes ahead, Dar Al Arkan will be the first Saudi company to issue an international bond this year. The banks mandated are Alkhair Capital, Deutsche Bank, Dubai Islamic Bank, Emirates NBD Capital, Goldman Sachs International, Nomura, Noor Bank and Standard Chartered Bank, who will act as joint bookrunners of the deal.

Islamic Development Bank gives initial price guidance for dollar #sukuk - lead

Islamic Development Bank (IDB) has given initial price guidance for a senior, unsecured five-year U.S. dollar-denominated sukuk in the high 30 basis points over mid-swaps. IDB President Bandar Hajjar said that the bank planned to launch a $2.5 billion sukuk soon. CIMB, Citi, Emirates NBD Capital, HSBC, Natixis, SMBC Nikko and Standard Chartered Bank are the banks leading the deal.

Emirates to meet investors ahead of possible #sukuk issuance

Emirates airline mandated local and international banks to arrange a global investor roadshow ahead of a possible sukuk issuance. The carrier mandated Citi and Standard Chartered Bank as global coordinators and joint lead managers, alongside BNP Paribas, HSBC, J.P. Morgan, Abu Dhabi Islamic Bank, Dubai Islamic Bank, First Abu Dhabi Bank, Emirates NBD Capital, and Noor Bank as joint lead managers. Proceeds from the issuance will be used for general corporate purposes. Emirates did not disclose the size of the possible sukuk, but said it will be of benchmark size. The company has tapped the debt capital markets with four issuances since 2011 raising over $3.65 billion, over 50% of which has been from sukuk. The most recent aircraft order was for 36 Airbus A380s worth $16 billion and was made in late January. Delivery of the aircraft will begin in 2020.

Islamic bonds face 'uncertain and muted' 2018 amid central bank tightening and geopolitics

According to S&P Global Ratings, the outlook for 2018 is uncertain because of geopolitical risks and economic uncertainties. Sukuk issuance was strong last year with $97.9 billion, up 45.3% from the $67.4 billion issued in 2016. So-called "jumbo issuances" were seen in Saudi Arabia and other Gulf Cooperation Council (GCC) economies in 2017. Mohamed Damak, senior director at S&P Global Ratings, said the first two months of 2018 had been marked by a good performance for local currency issuance and a drop in foreign currency issuance. He added that 2018, as a whole, was expected to see a drop in sukuk issuance, with expectations for around $70-80 billion in total. There are a number of reasons for this, including central bank tightening, lower financing needs of GCC banks and geopolitical risks. Another reason for lower sukuk performance could be the slow progression of the standardization in the sukuk market.

New Form of Islamic Bond Makes Debut at Iran Fara Bourse

The Iranian government issued 30 trillion rials (about $670 million) worth of Manfa’ah sukuk at the over-the-counter exchange Iran Fara Bourse. The 42-month bonds, bearing a maximum of 20.1% annual interest, will be backed by 51 trillion rials ($1.13 billion) of government revenues. Each Manfa’ah sukuk is priced at 1 million rials ($22.2).

#Saudi will issue #sukuk as soon as market conditions allow-DMO chief

Saudi Arabia is committed to the sukuk market and will issue Islamic bonds as soon as market conditions allow. Fahad al-Saif, president of Saudi Arabia’s debt management office (DMO) said Saudi Arabia had a ratio of 65% to 35% for local to international issuance, plus or minus 10%. He added that the DMO aimed to develop the local market but not to crowd out the banks. Saudi Arabia started issuing debt in the international markets in 2016 when it issued $39 billion in bonds, including a $9 billion sukuk. Domestically, the government has raised a total of over 70 billion riyals ($18.67 billion) through monthly local currency sukuk issues. The kingdom has recently agreed the refinancing, extension and upsizing of a $10 billion loan it had raised in 2016. The loan has now been increased to $16 billion. Furthermore, a new dollar bond sale is expected over the coming weeks.

UPDATE 1-Islamic Development Bank to launch $2.5 bln #sukuk "soon" -president

The Islamic Development Bank (IDB) announced it would launch a $2.5 billion sukuk "soon". Bank President Bandar Hajjar said the IDB was also planning to set up a $500 million fund to support science and technology start-ups. The institution has recently hired banks as joint lead managers and bookrunners for a new U.S. dollar-denominated sukuk. The banks are CIMB, Citi, Emirates NBD Capital, Gulf International Bank, HSBC, NATIXIS, SMBC Nikko and Standard Chartered Bank. Hajjar added he expected to sign a memorandum of understanding with the China-led Asian Infrastructure Investment Bank (AIIB) soon, on joint investing in Africa. Timing and size of the cooperation were not disclosed, but it would target the 26 poorest countries on the continent.

Al Hilal Global #Sukuk Fund delivers 3.93% dividend

Al Hilal Bank has announced the dividend payout of the Al Hilal Global Sukuk Fund. The Fund, which was launched in March 2012, distributed a 3.93% dividend to all registered unit holders. Al Hilal Bank CEO Alex Coelho said the Fund had registered excellent cumulative total returns since its inception in 2012. Al Hilal Bank currently offers 3 open-ended mutual funds inclusive of the Global Sukuk Fund. In 2017, Al Hilal Global Sukuk Fund was awarded the title "Best Fund over 3 years", while the GCC Equity Fund received the "Best Islamic Fund" award in 2013 and 2014. The bank plans to continue launching investment products as part of its ongoing efforts to create value and increase diversification for its clients.

Green, Islamic investors find common ground with Indonesian #sukuk

#Indonesia became the first Asian sovereign to sell green sukuk, raising $1.25 billion via a five-year deal, alongside a $1.75 billion 10-year sukuk. Proceeds will be used on eligible projects, ranging from renewable energy to waste management. Indonesia’s sukuk was based on an agency contract known as wakala and also incorporated a green framework assessed by the Centre for International Climate and Environmental Research (CICERO). Such a convergence of investment principles could widen the appeal of sukuk beyond Asia and the Middle East to include ethical investors in Western countries. More transactions might be needed to fully test the appetite of green investors for sukuk, as Indonesia’s green sukuk saw stronger takeup from regional investors.

Counting Milestones From N100bn #Sukuk Roads Investment Fund

In September 2017, the Federal Government of Nigeria raised N105bN to fund the construction of roads in the country. Soon after that, finance minister Mrs. Kemi Adeosun began the disbursement of the fund to commence work on the twenty five key economic roads in the six geo-political zones. The reconstruction of the outstanding sections of Benin to Ofusu to Ore to Ajebandele to Shagamu Expressway had been completed. At the other sites the construction work is on with massive presence of construction machineries and materials.

#Indonesia raises $3bn in Sovereign #Sukuk including $1.25bn Green Sukuk

Indonesia raised $1.25bn as the world’s first sovereign green sukuk. The country's latest sukuk was priced at a yield of 3.75% and has a tenure of 5 years. Non-Sovereign Malaysian organisations have previously issued green sukuk, most recently with two issuances in 2017. Indonesia also raised US$1.75 billion via a 10-year sukuk sold at the same time as the green issuance. The non-green sukuk was sold at a coupon rate of 4.4%. Globally, $155.5 billion of green bonds were sold last year, according to the London-based Climate Bonds Initiative.

DIB boosts emirate’s #Sukuk listings to over $53b

Dubai Islamic Bank (DIB) is celebrating the listing of a $1 billion Sukuk on Nasdaq Dubai. The listing is the first benchmark dollar-denominated sukuk from a GCC issuer in 2018. DIB's Group CEO Dr Adnan Chilwan said the bank's master plan was developed a decade ago and has yielded solid results so far. He added that the strong demand for the credit continues to grow across a diverse global investor base. This issuance is DIB’s sixth sukuk on Nasdaq Dubai, making the bank the largest UAE debt issuer by value on the exchange with a total of $5.25 billion. The total value of all sukuk listed on Dubai’s exchanges has now reached $53.47 billion, the largest amount of any listing centre in the world.

#Indonesia issues world's first #green #sukuk bond - Financial Times

Indonesia, the world's largest exporter of coal, has become the first country in the world to sell a sovereign green sukuk bond. The country has borrowed $1.25bn with the issuance of a five-year sukuk. Luky Alfirman, head of the Budget Financing at Indonesia's Finance Ministry said the proceeds would be used to finance projects such as renewable energy, green tourism and waste management. The government also said it would take up more projects to address climate change mitigation and adaptation, which requires alternative financing. CIMB, Citigroup, Dubai Islamic Bank PJSC , HSBC and Abu Dhabi Islamic Bank were bookrunners on the deal.

Albaraka Turk raises $205 million via Tier 1 #sukuk

#Turkey's Albaraka Turk has raised $205 million via Tier 1 perpetual sukuk. It has a 10% profit rate, is sold as a private placement and issued through an Irish-domiciled special purpose vehicle. Albaraka Turk previously secured a $213 million murabaha-based loan syndication in April of last year. Malek Temsah, assistant general manager of treasury at Albaraka Turk said the latest transaction could serve as an example for other banks, which had previously issued sukuk as Tier 2 capital only. The lender appointed Standard Chartered Bank as global coordinator for the deal with Bank ABC, Emirates NBD, Qinvest and Noor Bank as lead managers.

Opinion: Global #sukuk market unlikely to repeat 2017 performance

In 2017 the exceptional performance of sukuk was driven by good liquidity conditions, alongside certain countries’ desire to develop their Islamic finance industries. However, the outlook for sukuk in 2018 is more uncertain. According to Mohamed Damak, S&P Global Ratings’ Head of Islamic Finance, tighter global liquidity conditions, mounting geopolitical risks and slow progress on the standardisation of Islamic finance products will continue to hold the market back from its full potential. While sukuk issuance may decrease in 2018, there are a couple of interesting trends. These include the more stringent application of the profit-and-loss-sharing principle supported by several Sharia scholars. The sukuk investor base is broadening, but there is a lack of a specific regulatory framework to protect retail investors.
Dubai Islamic Bank (DIB) has successfully issued a $1bn sukuk with a five-year tenor. It is the first US dollar benchmark sukuk transaction from the GCC in 2018. The issuance emanates from DIB’s $5bn sukuk programme and carries a profit rate of 3.625%. The instrument will carry a dual listing on the Irish Stock Exchange and Nasdaq Dubai.

DIB lists $1b #sukuk on Nasdaq Dubai

Dubai Islamic Bank (DIB) celebrates the listing of a $1 billion Sukuk on Nasdaq Dubai. The Sukuk is the first benchmark dollar-denominated Sukuk from a GCC issuer in 2018. It is DIB's sixth Sukuk on Nasdaq Dubai, making the bank the largest UAE debt issuer with a total of $5.25 billion. The latest Sukuk carries a profit rate of 3.625% with a five-year tenor. DIB's Group CEO Dr Adnan Chilwan said the master plan developed a decade ago has yielded solid results and the strong demand for the credit continues to grow across a diverse global investor base. He added that Nasdaq Dubai provided high visibility in the marketplace as well as close links to investors in the region and internationally.

Islamic Development Bank aims for $2.5bn Mega #Sukuk

Bandar Hajjar, president of the Islamic Development Bank (IDB), announced that the bank would soon issue its largest sized Sukuk for $2.5 billion. IDB is a regular issuer of Sukuk having last issued in September 2017 with a $1.25 billion issuance which was priced at 2.261%. The bank has recently partnered with China-led Asian Infrastructure Investment Bank (AIIB) and plans to co-finance many projects in Africa. Africa has witnessed a growing share of mostly sovereign Sukuk issuances. Sudan, Gambia, Senegal, South Africa have all issued sovereign sukuk, the latest issuer is Cote d’Ivoire with its inaugural debut in 2015 of USD 260 million.

#Sukuk Issuance in Africa: A Prospect for Further Growth

The burden of financing Africa’s infrastructure projects is shifting away from banks towards the Sukuk market. To date, Africa has witnessed a growing share of sovereign Sukuk issuances. While states such as Sudan and Gambia have issued Sukuk in the past, it was in 2014 that Senegal debuted the region’s largest Sukuk issuance (USD 208 million). Soon South Africa and Cote d’Ivoire followed suit. In June 2016, Senegal launched its second Sukuk issuance, valued at USD 350 million. Togo issued its maiden Sukuk worth USD 277 million with a 10-year maturity and Cote d’Ivoire issued its second sovereign Sukuk valued at USD 263 million in August 2016. Several African countries are in the midst of preparing legislation to facilitate Sukuk issuances and facilitate Islamic finance in their respective financial market.

Al Rayan Bank #UK’s £250mn #sukuk priced at 80 bps over 3-month Libor

Al Rayan Bank UK has priced its £250mn Islamic bond "Tolkien Funding Sukuk No 1" at 80 basis points over three-month Libor (London Inter-bank Offered Rate). The transaction is secured by a portfolio of prime UK, first-charge, owner-occupied, home purchase plans, originated by Al Rayan Bank. The sterling-denominated sukuk has an expected called weighted average life of three years. Proceeds raised from the sukuk issuance would be used by Al Rayan Bank to fund further growth in its asset book, which has increased by more than 23% over the last 12 months. Such residential mortgage backed securities (RMBS) are relatively rare in Islamic finance. The bank believes that there would be more opportunities to issue sukuk in the future and a higher potential for other Islamic banks to tap into the RMBS market.

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