IslamicFinance.de

The Sukuk has been assigned an investment grade credit rating of BBB- by Fitch and is being issued in amortizing tranches, each with a term of five years, and an average life of approximately 2.5 years. Distributions will be made quarterly to investors on a fully amortising basis, with a profit rate of seven per cent per annum. The first tranche of the program, for $20 million closed in October 2013, and was oversubscribed. The transaction was structured to fund the operations of one of FWU’s five main subsidiaries, Atlanticlux Lebensversicherung S.A. (ATL), Luxembourg. The lead arranger and bookrunner for this issuance, EIIB-Rasmala, comprises the AIM-listed European Islamic Investment Bank Plc and Rasmala Group.

Luxembourg's parliament could pass a bill as soon as two months from now to facilitate its first issue of sovereign sukuk, though an upcoming budget vote may delay approval for five months. Last month, the Luxembourg government presented a bill to parliament to allow the securitisation of assets for a proposed sukuk worth 200 million euros ($275 million), part of efforts to boost the tiny state's Islamic finance credentials. Lawmakers are now studying the bill's conformity to existing laws, while the actual structure and issuance of the sukuk depends on the finance ministry. Legal filings show Luxembourg's sukuk would be denominated in euros and listed on an exchange, but such details are not final.

Private investors from Gulf Arab countries plan to establish the first full-fledged Islamic bank headquartered in the euro zone. The investors aim to launch the venture, named Eurisbank, in Luxembourg during the last quarter of 2014. With initial capital of EUR 60 million, the bank would offer retail, corporate and private banking services, and would open branches in Paris, Brussels, the Netherlands and Frankfurt. In addition to the royal family from the UAE, Eurisbank will be owned by a bank from a country in the GCC and other private investors. The founders of the bank plan to apply for a license in January and expect to obtain regulatory approvals by April.

Luxembourg-based SEDCO Capital Global Funds (SCGF) has announced the first ever Shariah-compliant funds managed according to environmental, social and governance (ESG) principles. The SEDCO Capital US Equities Fundamental Indexing® Fund and SEDCO Capital Global Higher Dividend Yield Fund are screened for compliance with international conventions and guidelines on environment, human rights and business ethics such as UN Global Compact and OECD Guidelines. Non-compliance is dealt with through a process of engagement and exclusion. The funds are targeted at institutions, high net worth individuals, family offices, and qualified distributors wishing to invest in a socially responsible manner, while complying with Shariah principles. The funds can also be distributed by banks who wish to offer this investment opportunity to customers.

Luxembourg-based SEDCO Capital Global Funds (SCGF) has announced the first ever Shariah-compliant funds managed according to environmental, social and governance (ESG) principles. The SEDCO Capital US Equities Fundamental Indexing Fund and SEDCO Capital Global Higher Dividend Yield Fund are screened for compliance with international conventions and guidelines on environment, human rights and business ethics such as UN Global Compact and OECD Guidelines. Non-compliance is dealt with through a process of engagement and exclusion. The funds will also incorporate proxy voting according to best corporate governance standards in its ESG programme. The funds are targeted at institutions, high net worth individuals, family offices, and qualified distributors wishing to invest in a socially responsible manner, while complying with Shariah principles.

PwC Luxembourg in association with the Luxembourg Stock exchange publishes a new brochure about Sukuk listing in the Grand Duchy. This document distributed on 6 May 2013 during the “Journée boursière” provides an overview of the Islamic Finance Market in Luxembourg and highlights the benefits of Sukuk Listing and Trading in Luxembourg. 16 Sukuk have been listed on the Luxembourg Stock exchange. With more than 3,127 listed issuers coming from 103 countries, the Luxembourg Stock Exchange meets capital market players’ needs. Luxembourg remains one of the most competitive, stable and secure environments in Europe to locate securitisation transactions. The development of Islamic Finance in Luxembourg has been set as priority by the Grand Duchy.

Sedco Capital, the Saudi Arabia-based asset manager, has launched an investment platform of Sharia-compliant funds aimed at high net worth investors and institutional investors. The Sedco Capital Global Funds platform, a Luxembourg Sicav, currently has a choice of seven investment funds with total assets under management of more than $1bn. The plan is for the platform to include over 15 funds totalling more than $1.6bn by the end of 2013.

Due to the growing number of Shariah-compliant funds in Luxembourg, four companies have launched the service ALIF (Alliance for Luxembourg Islamic Finance) which offers administration and custody of Islamic funds in a Shariah-compliant manner. The service includes legal work and Islamic Finance expertise. The portfolios and processing of the funds registered by ALIF will be periodically reviewed by the Shariah Supervisory Board of Amanie Advisors.

The Alliance for Luxembourg Islamic Finance (ALIF) will ensure Shari’ah-compliant custody and administration service at the time that total assets under management reach estimated $5.3 billion with growing number of Middle East investment funds. Luxembourg is fifth in the rating of Shari’ah-compliant funds worldwide. Already 41 egulated Shari’ah-compliant investment funds are based in Luxembourg. Four companies are uniting in order to establish a specialised platform that will service Shariah-compliant investment funds. These companies are Amanie Advisors, ADEPA Asset Management, Theisen Law, and KBL European Private Bankers. The joint venture will be known as Alliance for Luxembourg Islamic Finance (ALIF).

The Association of the Luxembourg Fund Industry (ALFI) has made its collection of best practices for setting-up and servicing Islamic funds public. Thus, a higher level of understanding and consistency of the requirements and expectations to this developing market sector can be ensured. This year several new Shariah-compliant funds were launched, making 2012 a busy year for the Luxembourg Islamic finance community. Luxembourg currently has 41 funds with EUR4bn in assets under management reaching the fifth place worldwide and the first in Europe in terms of number of Shariah-compliant domiciled funds.

The global Islamic capital markets advisory firm Amanie Advisors has launched an Irish operation aiming to boost Ireland's growing Islamic finance sector. It is also expected to facilitate both Irish and European companies to have access to funding means of the Islamic capital markets. Amanie's group chairman Dr Daud Bakar explained the choice of Ireland with the country's increasing reputation as a hub for operations in the branch of Islamic finance.

The world’s third-largest asset-management company - Franklin Templeton Investments is starting its first Islamic funds. Following the steps of companies like BNP Paribas, Templeton will start three sukuk and stock investment vehicles in Luxembourg in the next couple of months. Thus, they aim to win business in the Muslim world.

Luc Frieden, Luxembourg's Minister of Finance, has underlined the fact that given that financial institutions under Europe have remained stable against the backdrop of the eurozone debt crisis, it can learn and win from Islamic finance.
He added that Asia and Europe must join forces for the development and prosperity of the global economy.

It seems that HSBC Amanah anticipates a pipeline of 30 new Islamic funds to raise its assets under management for serviced funds to $10 billion.
Germain Birgen, global head of securities services, stated that the bank currently services 90 Islamic funds worth roughly $5 billion in assets. He added that 30 new funds are forseen to be launched within the next 12 to 18 months.
He underlined the fact that there is also an increasing trend in the industry for Islamic fund managers in traditional Muslim markets to start international domiciled funds in Singapore and Luxembourg, to take advantage of better financial regulations and draw more conventional investors.

The statement of Yves Mersch, governor of the Banque Centrale de Luxembourg, revealed the fact that the Luxembourg government is in no hurry to issue a sukuk because there are currently no serious reasons for doing so.
The government doesn't need to borrow at this point, so no sukuk will be sold.
But Ernst & Young, Theisen Law and Lux Global Trust Services organized summit on "Islamic Finance in Luxembourg" and if he had participated, he may have a had different oppinion.

Pre-summit event at 8th Annual IFSB Summit to discuss developments in liquidity management for the Islamic financial services industry

Kuala Lumpur, 15 April 2011 – The Islamic Financial Services Board (IFSB) is organising its 8th Summit "Enhancing Global Financial Stability: Challenges and Opportunities for Islamic Finance" on 10-13 May 2011 in Luxembourg. Banque centrale du Luxembourg is hosting the Summit. Three pre-Summit events will be held on 10 - 11 May 2011 at the Chambre de Comemrce Luxembourg. These are:

1. Workshop on Islamic Finance and the IFSB Standards for Institutions offering Islamic Financial Services and Islamic Capital Markets;
2. Country Showcases by Malaysia and Luxembourg; and
3. Special Session on Liquidity Management in the Islamic Financial Services Industry.

Workshop on Islamic Finance and the IFSB Standards for Institutions offering Islamic Financial Services and Islamic Capital Markets, 10 May 2011

The attenders at the Islamic Financial Services Board (IFSB) will be, among others, central bank governors, representatives from Bahrain, the UAE, Jordan, Malaysia, Nigeria, and Bahrain, and many international finance and economic experts.
The host of the conference will be the Central Bank of Luxembourg and the theme is "Enhancing Global Financial Stability. Challenges and Opportunities for Islamic Finance".

The International Islamic Liquidity Management Corporation (IILM) is expected to issue the first Shariah-compliant financial instruments by year-end.
The minimum size of the instruments could be US$300 million depending on the market demand.
The IILM was established on October 2010 with 14 founding shareholders, comprising the 12 central banks of Indonesia, Iran, Kuwait, Luxembourg, Malaysia,Mauritius, Nigeria, Qatar, Saudi Arabia, Sudan, Turkey, and the United Arab Emirates (UAE), as well as two multi-lateral institutions, the Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector.

Asset and fund managers have a new option in choosing a mutual or equity fund structure in UCITS IV (Undertakings for Collective Investments in Transferable Securities) which according to prominent finance industry lawyers is ideally suited for a new generation of Shariah-compliant unit trusts, mutual funds and equity funds and products.
Luxembourg became the first EU jurisdiction to adopt UCITS IV at the end of December 2010, and as a major domicile for both conventional and Islamic investment funds has a first mover advantage.

Until recently the issuance of Islamic bonds, or sukuk, was confined to the Muslim world. But now a number of international borrowers are tapping the markets, including Nomura Holdings in Japan and Europe's first corporate borrower, International Innovative Technologies.
The ratings agencies Moody’s and Standard & Poor’s say they expect to see a rise in the number of sukuk issues by new players over the next 12 months, including issues by borrowers in Singapore, Australia, Luxembourg, Thailand, Hong Kong, France and Russia.
While the Islamic Financial Service Board and the accounting and auditing organization have defined standards for sukuk, defaults over the past year have shown that new guidelines must be set as problems arise, particularly as sukuk start to generate global attention.