Sukuk

Shahjalal Bank to issue #bond worth Tk 4.0b

The board of directors of Shahjalal Islami Bank has approved for issuance of Mudaraba Subordinated Bond worth Tk 4.0 billion. The new issuance is part of a process of inclusion in Tier-II Capital for a period of 7 years through private placement. The bond issue is subject to approval of the regulatory authorities – Bangladesh Bank, Bangladesh Securities and Exchange Commission. The bank’s paid-up capital is Tk 7,346.88 million and authorised capital is Tk 10,000 million, while total number of securities is 734,688,133.

JPMorgan adds Islamic bonds to emerging markets indices

JPMorgan will include sukuk in its emerging markets indices starting from October 31. Dollar-denominated sukuk from Turkey, Malaysia and Indonesia will be included in JPMorgan’s flagship EMBI Global Diversified index, against which an estimated $313 billion in assets is benchmarked. The move could help sukuk break away from their traditional buy-and-hold investor base. Pakistan’s $1 billion sukuk maturing in 2019 will be included in the JPMorgan Asia Credit Index alongside sukuk from Indonesia and Malaysia, but Qatar and Bahrain are currently absent. Only two corporate sukuk will be included in the JPMorgan Corporate Emerging Markets Bond Index: a 2023 sukuk from Dubai’s DP World and a 2024 sukuk from Saudi Electricity Co.

Islamic finance body IILM auctions first four-month #sukuk

#Malaysia-based International Islamic Liquidity Management Corp (IILM) has lengthened maturities in its Islamic bond programme by auctioning $500 million of four-month sukuk. Previously, the IILM has issued three-month and six-month papers, which were introduced to manage short-term funding needs. The IILM sold the four-month sukuk at a profit rate of 1.37389%, attracting 17 bids worth a combined $1.3 billion. It also sold $840 million of three-month sukuk at a profit rate of 1.24411%, attracting orders of $1.6 billion via 14 bids. The issues were bought by 11 primary dealer banks.

Ahli United Bank #Kuwait plans #sukuk issue of up to $200 mln

Ahli United Bank Kuwait has obtained approval from Kuwait's central bank to issue capital-boosting sukuk worth up to $200 million. The bank did not give a time frame for the issue but said it could include foreign and domestic currency tranches. The proceeds would be used to enhance the bank's capital base in line with Basel III global banking standards. Last year Kuwait's Capital Markets Authority released rules providing a legal basis for issuance of Islamic bonds, which is helping boost sales of sukuk. Kuwait's Gulf Bank and Boubyan Bank have both completed sukuk issues this year.

Under The Radar: #Sukuk Bonds Boom In West Africa

While Middle Eastern and Asian countries are leading the Islamic economy, Sub-Saharan Africa remains under-serviced. However, West Africa is seeing a marked uptick in Islamic finance, especially in the issuing of sukuk. Sukuk is increasingly being used to finance development projects, as well as to increase domestic capital reserves and financial inclusion. 2016 has seen a host of new sukuk issuances in West Africa. On August 10th, Togo’s initial CFA 150 billion ($263 million) sukuk offering closed. This comes after Senegal launched its second $263 million round at the end of June. As a result of sukuk’s unique traits, the IMF is promoting the regional adoption and inclusion of sukuk into African government debt strategies.

Fitch Updates Criteria for Rating #Sukuk

Fitch Ratings has updated its criteria for rating Sukuk, which replace the existing criteria published on 18 August 2015. Fitch's analytical assumption is that the structure of the sukuk and the underlying transaction provides for full recourse to the originator and the sukuk rating is driven solely by the originator's rating. It remains uncertain whether certificate holders will be able to enforce their contractual rights in local courts. Ratings assigned to sukuk do not imply any confirmation that the sukuk are sharia-compliant.

#Sukuk Market Key Players Abu Dhabi Islamic Bank, HSBC, Al Baraka Bank & Maybank Islamic Berhad Analysis Forecast 2020

Research analysts forecast the global sukuk market to grow at a CAGR of 8.51% during the period 2016-2020. The forecast has been prepared based on an in-depth market analysis with inputs from industry experts. To calculate the market size, the report considers the total revenue generated from the sukuk issuance primarily in the emerging markets such as Southeast Asia, Middle East, and rest of the world.

Fitch Assigns 'AAA(idn)' Ratings to Indosat Ooredoo's Bond, #Sukuk

Fitch Ratings #Indonesia has assigned National Long-Term Ratings of 'AAA(idn)' to Indosat Ooredoo's IDR 3,172 bn senior unsecured bonds and IDR 288 bn sukuk ijarah issues. The issues are launched from Indosat Ooredoo's IDR 9 trn bond programme and IDR 1 trn sukuk ijarah programme. Indosat Ooredoo will use the issue proceeds to refinance its existing rupiah debt, and to fund licence fees. The sukuk rating is at the same level as Indosat Ooredoo's National Long-Term Rating of 'AAA(idn)'. Fitch's rating for the certificates reflects the agency's belief that Indosat Ooredoo would stand behind its obligations.

#Ivory Coast returns to sovereign #sukuk market, after #Togo debut

Ivory Coast plans to complete a sale of 150 billion CFA francs ($263 million) worth of Islamic bonds, following Togo's debut sale of sovereign sukuk launched last month. The two West African nations join Senegal in tapping the market for sukuk, expanding the use of Islamic financing options outside the Middle East and Southeast Asia. The Ivory Coast will sell the 7-year sukuk using ijara with the subscription period closing on Aug. 31. This represents the second phase of a 300 billion CFA franc sukuk programme set up last year by the Ivory Coast. Togo plans to complete the sale of its sukuk later this week, aiming to raise 150 billion CFA franc with a 10-year maturity and a 6.5% yield. The lead arranger for both the Togo and Ivory Coast sukuk is the Islamic Corporation for the Development of the Private Sector (ICD).

MDV plans to issue RM1bil #sukuk in Q4

Technology financier Malaysia Debt Ventures Bhd (MDV) plans to raise RM1bil via sukuk in the fourth quarter of this year. The planned issuance is aimed to increase MDV's lending ability including to start-ups. CEO Datuk Md Zubir Ansori Yahaya said the new sukuk issuance would likely have a government-guarantee status. Md Zubir said the funds from the new sukuk, which will likely have a 10-15 year tenure, could be rolled out and replenished until end-2017. To-date, MDV has approved a total of RM9.8bil in financing support to 700 innovation, technology and information technology-based companies including Iris Corp, Puncak Semangat and MOL Global Inc.

SE Asia #sukuk benefit as distressed investors keep looking for yield

Inflows in debt vehicles issued by Muslim Southeast Asian nations have increased in the recent past. Malaysia and Indonesia are greatly benefiting from their current monetary easing policies, relaxed tax policies and government infrastructure spending programs. The Pan-Borneo Highway project adds to other sukuk issuances, among them a $1.3bn-offer by Sarawak Hidro, the state-owned developer of Malaysia’s biggest hydropower project, also on Borneo Island. Other infrastructure sukuk in the queue are a $440mn-issuance for the bridge connecting Peninsular Malaysia with Penang island and a $892mn-issuance for a highway network. Indonesia’s government is also enlarging the scope of sukuk-backed investment in roads and railways. However, the state budget is only capable of contributing 30%, which means that a large number of future issuances can be expected, with its uptake spurred by generous tax incentives.

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.

QIIB completes issuance of QR1bn #Sukuk

QIIB announced the issuance of QR1bn Sukuk. The Sukuk aims at boosting the Bank's Tier 1 Capital to maintain a higher Capital Adequacy Ratio (CAR) complying with the Basel III norms. Last year QIIB shareholders had approved the Bank's proposal to raise up to QR3bn through Sukuk issuance.
A higher capital adequacy will not only help the Bank's risks absorption capacity but also expected to promote financial stability and efficiency of the Shairah compliant banking services provider.

#Sukuk and Aregbesola’s education story

The State of Osun in southwestern Nigeria raised a sukuk bond worth 10 billion naira ($62 mn) from the capital market to fund educational development. After the recent trend of Eurobond issuance by African countries, Osun’s offering was sowing the seeds for more African sukuk. Prior to Osun, only Gambia and Sudan had issued local-currency short-term domestic notes. Osun's Governor Rauf Aregbesola believes that the potential of Islamic finance can also attract investors from the Middle East. Osun State’s planned multi-billion naira sukuk fund for education represents Nigeria’s most ambitious attempt to promote Islamic finance.

#Sukuk SRI at a crossroads

Over the last two decades, Islamic finance and socially-responsible investments (SRI) have become essential part of the development discourse. These two have seen the most rapidly growing areas of finance, of which Islamic financial assets have grown by 15-20% a year and its volume in 2014 exceeded US$2 trillion (RM8 trillion), while the SRI assets globally in the same year soared from US$13 trillion to US$20 trillion in two years. The principles of Islamic finance share common threads with SRI. These commonalities provide opportunities for Islamic finance to broaden its portfolio by tapping into the large amount of SRI funds available in global market.
Malaysia already started in August 2014, when it launched its Sustainable Responsible Investment Sukuk Framework to facilitate the financing of SRI initiatives. SRI sukuk can act as a compass for investors in the creation of shared value within society.

Understanding the #Sukuk fund for education in Osun

The State of Osun in southwestern Nigeria raised a sukuk bond worth ten billion naira ($62 mn) from the capital market to fund educational development. After the recent trend of Eurobond issuance by African countries, Osun’s offering was sowing the seeds for more African sukuk. Prior to Osun, only Gambia and Sudan had issued local-currency short-term domestic notes. Osun's Governor Rauf Aregbesola believes that the potential of Islamic finance can also attract investors from the Middle East. Osun State’s planned multi-billion naira sukuk fund for education represents Nigeria’s most ambitious attempt to promote Islamic finance.

Jumbo #sukuk swells #Malaysia's infrastructure bond pipeline

The Pan-Borneo Highway in East Malaysia, a jumbo project estimated to cost 27 bin ringgit ($9.16 bn), is finally starting to take shape as the federal government prepares to launch initial funding to start the construction. The selected group of banks includes the four top Malaysian lenders: CIMB, AmInvestment Bank, Maybank and RHB. About 60 per cent of the project will eventually be funded with proceeds from ringgit-denominated Islamic bonds to be issued through federal government funding vehicle DanaInfra Nasional. The first batch of bonds, wrapped with a federal government guarantee, is expected to raise around 10 billion ringgit. The launch is timed for August or September.

S&P: Global #sukuk market likely to undergo correction

According to Standard & Poor’s the global sukuk market is expected to undergo correction for the next 6 to 18 months. The total issuance of sukuk fell in the first half of the year by 12.5% in contrast with the booming conventional debt as the oil exporting countries tapped the market to raise funding. The correction in the sukuk space started with Bank Negara Malaysia’s decision last year to stop the issue of short-term sukuk and switch to other instruments for liquidity management for Islamic financial institutions. S&P global head of Islamic finance Mohamed Damak said the positive news for sukuk is that the European Central Bank is opening its liquidity tap and with yields low, that could push investors to look at the sukuk market. He added that the sukuk industry needs more standardisation otherwise volumes will likely remain low.

#Indonesia #sukuk beats #Malaysia in attracting Brexit-haven funds

Indonesia's Islamic bond yields have fallen faster than Malaysia's in the past three months, as the nation's higher-yielding notes do better at attracting foreign investors. Yields on rupiah sukuk due 2019 slid 37 basis points in the period, compared with 24 basis points for equivalent paper in Malaysia. Indonesia's three-year Islamic bonds pay 7.16%, while those in Malaysia yield 3.26%. Indonesian bonds are the best performers in South-east Asia this year after the government passed a tax amnesty bill on undeclared income held overseas. Bank Negara Malaysia lowered borrowing costs for oil, as well as its projection for consumer prices to 2%-3% in 2016, from 2.5%-3.5 %. Currently both nation's currencies are seeing a revival.

#Bonds or #Sukuks: Who’s winning the race?

Oil prices have plummeted sharply since mid-2014, putting an end to the commodities super cycle that started a decade ago. S&P Global Ratings expects oil prices will remain substantially below peak levels and stabilize at $50 per barrel by 2018 and beyond. While governments affected by the price drop are looking to spending cuts, taxation, and the privatization of state companies, their financing needs remain significant. Despite the significant drop in oil price since mid-2014, total sukuk issuance didn’t pick up in 2015 or the first half of 2016. In fact, issuance actually dropped in the first half of 2016 by 12.5% compared with the same period in 2015. Issuances in the second half of 2016 will continue to depend on monetary policy developments and volatility in developed markets as well as the policy actions of sovereigns in Gulf Cooperation Council (GCC) countries and Malaysia.

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