Sukuk

Zawya Sukuk Report for Free Download

The Zawya Collaborative Sukuk Report covers the following issues:

  • What is the distribution of current and potential investors and what is their appetite?
  • What is the appetite of the Supply side and what drives their need to issue?
  • What are the challenges faced by the industry, what are the associated developments and what needs to be done to resolve them?

The download is free after providing contact details to Zawya:

Gassner's picture

Nakheel - Event of Default - Legal Issues?

Dear Readers,

An article in the Financial Times, has discussed the legal issues surrounding to an eventual Event of Default of the Nakheel Sukuk, which can be read here:

http://www.ft.com/cms/s/0/215c0502-e038-11de-8494-00144feab49a.html

Some comments came afterwards referring to that piece, e.g. on FT Alphaville:

http://ftalphaville.ft.com/blog/2009/12/04/86736/nakheel-and-the-sukuk-l...

Claiming that because of Sharia law in the UAE there is uncertainty regarding burden sharing.

Such a claim is an error. While the Sukuk was structured to comply with Sharia the various Agreements are either governed by English law or UAE law.

Therefore it is crucial to see how assets could be seized under UAE law not under Sharia law: A nice summary of the dispute resolution in the UAE is free for download by the law firm Afridi and Angell:

http://www.legal500.com/assets/images/stories/firmdevs/disputeresolution...

Gassner's picture

Dubai World and Nakheel Sukuk - What did the prospectus say?

Dear Readers,

some background on the standstill:

Sukuk prospectus of the related Nakheel entity:
http://blogs.thenational.ae/economy_blog/Nakheel%20Development%201%20Pro...

citation:
"Risks Relating to the Co-Obligors and the Co-Obligor Group Strategy

The growth strategy of the Co-Obligor Group is based on certain assumptions relating to, inter alia,
economic conditions, market for real estate and demographic conditions in Dubai. [...] This could, for example, have an impact on the rental income, sales proceeds or other income (such as management fees) available to the Co-Obligor Group and the value of its projects, which could affect its ability to make payments under he Transaction Documents."

and the issue of implicit sovereign support was nicely discussed in a blog:
http://blogs.thenational.ae/economy_blog/2009/08/nakheels-bond-prospectu...

The rational behind is explained by a rating agency here in 2007:
http://www2.standardandpoors.com/spf/pdf/media/sp_approach_to_sukuk_17-s...

"from its parent also benefited from strong implicit government support."

S&P: Several Dubai Government-Related Entities Downgraded

Press Release

Several Dubai Government-Related Entities Downgraded And On Watch Negative Following
Debt Restructuring Announcement

DUBAI (Standard & Poor's) Nov. 25, 2009--Standard & Poor's Ratings Services said it
had taken rating actions on a number of Dubai-based government related entities
(GREs) and transactions (for full details see "Ratings List" below). Standard &
Poor's has downgraded DIFC Investments LLC, DP World Ltd., Jebel Ali Free Zone
(FZE), Dubai Holding Commercial Operations Group LLC (DHCOG), and Emaar Properties
PJSC. All of these entities have been placed on CreditWatch with negative
implications. The ratings on Dubai Multi Commodities Centre Authority (DMCC) were
affirmed, although they were placed on CreditWatch negative. A CreditWatch negative
placement also applies to the notes issued by Thor Asset Purchase (Cayman) Ltd.
(Thor), which are securitized by cash flows from a revolving pool of existing and
future receivables originated by Dubai Electricity and Water Authority (DEWA; not
rated).

The rating actions are the result of the announcement on Nov. 25 of the

Dubai World asks for debt ‘standstill’

Dubai World, a conglomerate owned by the government of Dubai, is asking its creditors for a six-month “standstill” on its obligations. Dubai World includes Nakheel, which has USD 4 bn in outstanding Islamic debt falling due next month.

IFC lists USD 100 mn Sukuk in Dubai and Bahrain

The International Finance Corporation (IFC), the multilateral development bank, will list a USD 100 mn 5-year Sukuk in Dubai and Bahrain. The IFC plans to return to the market with new issuances every 12 months to 18 months.

HM Treasury: Legislative framework for the regulation of alternative finance investment bonds (Sukuk)

On 14 October 2009 HM Treasury published a feedback statement to the consultation regarding regulation of Sukuk.

The document summarises the responses received to the above consultation, and provides feedback on these.

Further feedback to HM Treasury is requested:

"We would welcome any further comments on the revised statutory instrument (including the consequential amendments). As we have already conducted a full three month consultation, we will allow for a further period of approximately one month for any additional comments to be sent. Please provide any comments by 6 November 2009."

The consultation document can be downloaded at the link below.

S&P: Abu Dhabi's TDIC Sukuk Ltd. Assigned prelimary rating 'AA'

Press Release of S&P:

We are assigning our preliminary 'AA' rating to TDIC Sukuk Ltd.'s certificates issuance program, under which it can issue up to $1.45 billion certificates (sukuk al-ijara).

The rating is equal to, and is fully reliant on, the rating on Tourism Development and Investment Company.

LONDON, October 1, 2009--Standard & Poor's Ratings Services today said it had assigned its preliminary 'AA' rating to TDIC Sukuk Ltd.'s certificates issuance program, under which it can issue up to $1.45 billion certificates (sukuk al-ijara). The rating is equal to, and is fully reliant on, the rating on Tourism Development and Investment Company (TDIC; AA/Stable/A-1+). The preliminary rating is based on information as of Oct. 1, 2009. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings.

Islamic Finance in North America

Yasaar media published a new report called Islamic Finance in North America 2009 for free download, which is co-published by Codexa Capital, UM Financial Group, King & Spalding, and Doha Islamic.

According to the report Islamic finance in North America has developed along two quite separate paths:

  • The first path focuses on retail Islamic finance and centres mostly on home financing products and credit cards.
  • The second path involves a number of high profile GCC-based Islamic investment banks and their deployment of hundreds of millions of dollars in private equity and real estate developments in North America.

Read the full report for free at the link below.

S&P: Sukuk Market Has Continued To Progress In 2009, Despite Some Roadblocks

Press Release

PARIS, September 2, 2009--New issuance of sukuk (bonds compliant with Islamic law) topped $9.3 billion in the first seven months of 2009 compared with $11.1 billion during the same period in 2008, said Standard & Poor's Ratings Services in a report published today, "The Sukuk Market Has Continued To Progress In 2009 Despite Some Roadblocks."

"The smaller amount of issuance was due not only to the still-challenging market conditions and drying up of liquidity, but also to the less-supportive economic environment in the Gulf Cooperation Council countries, particularly in the United Arab Emirates," said Standard & Poor's credit analyst Mohamed Damak. "The medium-term outlook for the sukuk market remains positive, though, in our view, given the strong pipeline--with sukuk announced or being talked about in the market estimated at about $50 billion--and efforts to resolve the major difficulties impeding sukuk market development."

VTB Will Sell 3 Sukuk

VTB Capital said that it has mandates to manage the sale of at least three Sukuk for Russian companies, each of which could raise USD 200 million to USD 500 mn. The sale shall start soon according to Yury Solovyov, VTB Capital's president and chief executive, said in an interview in Dubai.

Strong demand expected for SEC Sukuk

Saudi Electricity Co, the state- controlled power producer, may raise as much as USD 1.87 bn, SAR 7 bn, in the largest sale of Sukuk.

The 5-year Sukuk, which is expected to be rated AA- by Fitch rating service, may pay between 90 basis points to 100 basis points over Saudi interbank rates a market expert is quoted.

The spread above the London interbank offered, or Libor, on corporate and government sukuk has narrowed to 7.6 percentage points from an all-time high of 12.3 percentage points in February, according to HSBC-Nasdaq Dubai indexes.

S&P sceptical on Sukuk market growth

Sukuk growth might be limied due to higher costs of structuring, issuing, accounting fees, real estate downturn, and low hydrocarbon prices, says S&P in a report. Nevertheless, it said sukuk-based financing remained the most attractive means of raising funding for medium and long-term capital costs for GCC issuers.

Nakheel restructuring efforts will affect other Dubai ratings

The refinancing of Nakheel’s US$3.5 billion (Dh12.85bn) Sukuk will be of utmost relevance to the credit ratings Moody's has for Dubai entities. Nakheel has not the stand alone capacity to repay the Sukuk reported Paulo Vecina in The National.

TID Global Sukuk I Limited - Financial Restructuring Update

The Investment Dar Co.The Investment Dar Co.held its latest financial restructuring update meeting in Dubai on Monday 8 June 2009 with its banks and investors. The firm expects its audited results soon. Morgan Stanley is appointed by the steering committee for debt restructuring as their financial advisor.

Saad Group Sukuk down at 25 % of nominal value

Saad Trading Contracting & Financial Services Co.’s debt securities, known as sukuk, are trading for 25 cents on the dollar compared with this year’s high of 79 cents on Feb. 26, data compiled by Bloomberg show. Saad Group on June 2 appointed BDO Capital Finance to advise the company on restructuring plans after the Saudi central bank last month froze bank accounts of al-Sanea and his family members, reported Haris Anwar on Bloomberg.

Bahrain Sukuk oversubscribed

Bahrain's USD 750 mn sovereign sukuk issue attracted an order book of about USD 4 bn and the size was increased to USD 750 mn. The sukuk was priced at the low end of expectations at 340 basis points over US Treasuries. Some 55 % of the issue went to Middle Eastern investors, with Europe accounting for 26 % and Asia for 15 % of the investor base of almost 200 accounts.

Saudi bond market starts

Saudi Arabia said it launches its new market for Islamic bonds, or sukuk, and bonds.Tadawul currently trades Islamic bond issues by only two listed firms - Saudi Basic Industries Corp and Saudi Electricity, which will launch sukuk on Saturday worth 5 billion saudi riyals. The government is a major shareholder in both firms.

Dubai Islamic Bank purchases outstanding Sukuk through cash tender offer

Dubai Islamic Bank announced that it has purchased USD 50.6 mn from the partial cash tender offer to retire USD 200 mn of outstanding Sukuk. DIB purchased the certificates at 88 % of the face value.

Syndicate content