Sukuk

Indonesia aims for USD 580 mn Global Sukuk

Indonesia aims to raise about USD 580 mn from its first global 5-year Sukuk issue this year, targeting specifically Mideast investors among others, such as from Asia.

Malaysia’s capital market fundamentals stronger: Securities Commission

Malaysia’s capital market is fundamentally and prudentially stronger than during the 1997/98 financial crisis, according to the Securities Commission (SC). The market’s exposure to the current global financial turmoil is indirect, the commission said in its Annual Report 2008 released yesterday.

The country also guarantees 100 % of bank deposit until 2010, it said.
The Malaysian Islamic capital market also proved to be relatively resilient with 47 sukuk issues worth RM 43.2 bn approved by the SC last year, which accounted for 31 % of all corporate bonds approved.

Malaysia's PLUS issues RM 745 mn Sukuk

Malaysia's PLUS Expressways issues additional RM 745 mn via a specical purpose company, PLUS SPV Berhad based on Musharaka to investors identified via a book building process. The size of the book was successfully increased from RM 400 mn to RM 745 mn under the Sukuk program.

Indonesia follows up on strong sukuk debut

John Aglionby reported on 23 February in the Financial Times that Indonesia is planning further after seing the first retail Sukuk being an outstanding success raising Rp 5,556bn (USD 466 mn) compared with the target of Rp 1,700 bn. The coupon rate is fixed at 12 per cent over three years and is paid monthly.

USD denominated Sukuk to retail investors and medium-term notes, the latter expected to be in the region of USD 3 bn, are still under consideration. The global sukuk and medium-term notes have been delayed after a successful international roadshow this month, pending parliamentary approval for the government’s revised budget.

Fitch Ratings: Dubai Bond Positive For Government-Linked Corporations

Fitch Ratings released that the recent announcement of a USD 20 bn bond programme is improving the overall liquidity which will be positive for government-linked corporates facing the need to refinance maturing debt at a time when the impact of regional economic conditions, especially in the construction and property sector, are becoming increasingly negative.

Official figures put Dubai government and state-owned corporate debt at USD80 bn, of which Fitch estimates that around USD11 bn of foreign currency debt matures during 2009. Last week Borse Dubai raised USD2.5 bn in financing, and received an equity injection of USD1 bn from its shareholder, Investment Corporation of Dubai, to refinance an aggregate USD3.8 bn loan (part of the 2009 maturities).

Source: 

http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20090225\ACQDJON200902250527DOWJONESDJONLINE000316.htm&&mypage=newsheadlines&title=PRESS%20RELEASE:Fitch:Dubai%20Bond%20Positive%20For%20Government-Linked%20Corps

Moody's sees Dubai bond positive for corporate ratings if unconditional

Moody's Investors Service said on Monday the Dubai's government's USD 20 bn 5-year, 4 % bond programme could support debt ratings of Dubai companies that were placed under review for a downgrade earlier this month. If there are no restrictions on how Dubai uses bond proceeds this could support Moody's ratings of Emaar, DP World, DIFC Investments, Dubai Holding Commercial Operations Group, Dubai Electricity and Water Authority and the Jebel Ali Free Zone. Moody's had said it could lower its debt and Islamic bond, or sukuk, ratings for the six firms, all linked to the Dubai government, by as much as two notches each. The review is due shortly.

Indonesia Retail Sukuk demand above expectations

Muhamad Al Azhari & Dion Bisara reported on 24 February in The Jakarta Globe that Indonesia raised Rp 5.56 trillion ($467 million) from the sale of the country’s first retail Islamic bonds, or retail sukuk , beating the sales target due to strong demand from investors, according to the finance minister.

The government initially aimed to raise Rp 1.77 trillion through the debt paper sale, but later raised that target to Rp 3.7 trillion as demand appeared to be strengthening. A 12 % of return was offered for the bonds, higher than premium-grade bank deposit rates of about 10 percent for preferred customers.

The debt papers were sold at a par, or face value, of Rp 1 million per unit, with a minimum purchase of Rp 5 million. The sukuk has a fixed payout on the 25th of each month and matures on Feb. 25, 2012.

Sukuk market and prospects, another Sukuk fund in the pipeline?

According to a report of Global Investment House more than 100 Sukuk equivalent to more than USD 38 bn are awaiting issuance if markets recover.

DIB Capital, a 100 % subsidiary of Dubai Islamic Bank, sees the long term prospect as strong for the Sukuk market according to Nadeem Lodhi, head of capital markets and syndications. Also they are planning to launch a Sukuk fund.

Hong Kong goes forward with Islamic finance

Mushtak Parker writes in Arab News on 23 February that the Hong Kong Special Administrative Region government is finalizing new tax laws which would facilitate the introduction of Islamic finance on a par with equivalent conventional products, and there is a strong possibility that the Hong Kong Airport Authority (HKAA) will issue the debut quasi-sovereign Sukuk from the island enclave during 2009.

However, Hong Kong is concerned about the effect on Islamic finance of the credit crunch and the global financial crisis, since no economy, including those in the Middle East and GCC (Gulf Cooperation Council) countries, have gone untouched. Thus it seems unavoidable that Islamic finance will slow its pace of development in the near term, "alongside growing downside risks in the global financial scene."

Dubai`s credit situation

Rachel Ziemba analysis the credit situation of Dubai on 17 February on RGEmonitor observing that in recent weeks CDS spreads on the debt of Dubai’s largest State-linked vehicles like Dubai Holding etc shot up dramatically after Abu Dhabi announced a unilateral recapitalization of its banks. The cost to buy prrotection on the 1 year bond has doubled since late January and now stands at 1073bps. This is deemed linked to the previous market opinion that Abu Dhabi would support Dubai, while the recent step to just re-capitalise their own banks caused some doubts. The property bust in Dubai goes on with severe consequences.

The full report shows an excellent overall summary of the situation. It can be accessed via the link "source" below.

UK working to offer sukuk in sterling

Rachna Uppal reported on 16 February that the UK Sterling Sukuk will be offered in the foreseeable future. There is work ongoing on the issue how t o treat the coupon of the Sukuk and put it on par with bonds.

Indonesia plans regular domestic Sukuk with maturity of 5 years

Indonesia plans to issue regular domestic Sukuk Al Ijara with a maturity of 5 years or more according to the finance ministry. The currency is not yet decided.

Fixed Income market seen as important to Gulf growth

Sean Davidson wrote on 13 February in Business 24/7 about the importance of an active sovereign bond market to strengthen Gulf monetary policies allowing for an integrated market for local currency government bonds where the central, local and forweign banks, individuals and other institutional investors can participate - a matter which plenty of economists agree to.

The UAE government has indicated plans to issue conventional bonds and sukuk in the near future with maturities of up to 30 years.

Islamic Securitization - The Right Way Forward?

Heiko Hesse, Andreas Jobst and Juan A. Sole published on RGEmonitor on 13 February an analysis regarding Islamic Securitization and the grown interest for Islamic finance during the financial crisis.

Islamic finance is driven by the general precept of extending religious doctrine in the shari’ah to financial agreements and transactions. Predatory lending, deteriorating underwriting standards, and a series of incentive problems between originators, arrangers, and sponsors, of which all have infested the conventional securitization process, belie fundamental Islamic principles.

The article linked in the source relates the characteristics of this form of securitization to calls for enhanced disclosure and standardization, ratings agency reforms, and better transparency of origination and underwriting practices in conventional structured finance. In particular, it assesses the potential of conflicts of interest (which became apparent in the U.S. subprime mortgage crisis) to contaminate the integrity of the securitization process if it were conducted in compliance with shari’ah principles.

Yields in the Gulf rising strongly

Soren Billing reported on 10 February in Arabianbusiness that credit default swaps for Mideast lenders have risen substantially led by Bahrain, spreads have widened by 174.2 basis points (bps) in the last three months, followed by Saudi Arabia (114.8 bps), Abu Dhabi (96.7 bps) and Qatar at (70 bps), Corporates in the region have been hit even harder. The CDS spreads on Dubai based companies range between 600 bps and 1,100 bps, which is significantly higher than on Abu Dhabi based corporations, which range between 250 bps and 400 bps. The yield on Nakheel’s Sukuk that matures on Dec. 14 this year reached 41.9 % from 27.7 % a month ago.

Western companies looking to Sukuk

Cecilia Valente and Frederik Richter reported 10 February on Reuters, that Western companies, especially in the UK and France, are considering issuing Sukuk to tap Middle Eastern investors.

PLUS plans RM 1 bn Sukuk sales to pay debt, fund projects

PLUS Expressways Bhd, Malaysia’s largest toll-road operator, plans to sell RM 1 bn, 5-year Sukuk to help repay maturing debt and finance expansion projects. Bank Islam Malaysia Bhd and CIMB Islamic Bank Bhd supports the sale of the Sukuk. The company aims to raise RM 350 mn in the coming months to refinance debt maturing in June and to raise another RM 200 mn in the second half of the year to fund a road project in Indonesia.

Abu Dhabi Islamic Bank bolsters Tier 1 capital with government funds

Abu Dhabi Islamic Bank (ADIB) is issuing a Tier 1 capital Sukuk to the government of Abu Dhabi, raising AED 2 bn (USD 545 mn). The issuance of the Sukuk was approved by ADIB's board of directors on 3 February 2009, and will be subject to obtaining shareholder approval. The Sukuk will pay an expected return at a rate of 6 % per annum, payable semi-annually in arrears from (and including) the issue date for a period of 5 years, and thereafter at a rate, reset and payable semi-annually in arrears, reflecting the initial margin above the then prevailing six month Emirates Interbank Offered Rate.

Tirad Mahmoudis the Chief Executive Officer of ADIB.

Noor Islamic the UAE's top lead arranger in 2008

Noor Islamic Bank topped the 2008 Bloomberg list of leading Sharia’ah compliant Lead Arrangers in the UAE and ranked third on the list of leading Islamic finance Book Runners in the country in its first year of operation.

Hussain Al Qemzi is the CEO of Noor Islamic Bank.

Law firm Ashurst announces formation of Islamic finance restructuring team

Ashurst has formed a multidiscipline team of lawyers from across its global network to assist clients with Islamic finance restructuring and Sharia compliant distressed financings. This comes as a result of increasing client demand for assistance with Sharia compliant transactions and investments that require restructuring due to current market conditions.

Syndicate content