IslamicFinance.de

Kuwait Financial Centre (Markaz) in its recent research on the GCC Fixed Income Market has highlighted the trends in the Kuwaiti bonds and sukuk market during the period from 2003-2009.
CBK issued 1) Treasury Bills, which are debt obligations with maturities of less than one-year and no periodic interest payments, 2) Central Bank Bonds, which are debt obligations with maturities of less than one-year carrying a fixed coupon rate, and 3) Treasury Bonds which are debt obligations with maturities greater than one-year with a fixed coupon rate.

Malaysia plans to let issuers sell to individual investors sukuk that can be traded on the local stock exchange as the government seeks to reverse a 24 percent decline in sales in the world’s biggest market for Islamic bonds.
Bursa Malaysia Bhd., the exchange operator, is working with regulators on rules to enable companies to issue Islamic debt that would be affordable to the public, Chief Executive Officer Yusli Yusoff said last week. Issuance of the securities fell to 19.8 billion ringgit ($6.4 billion) this year from 26.2 billion ringgit in 2009, the steepest drop since 2003.
Bursa Malaysia is working on developing the sukuk for individual investors.

The state-run Islamic Bank of Thailand will delay the nation’s first sale of sukuk until early next year as it awaits new guidelines from the securities commission.
Thai Securities & Exchange Commission spokeswoman Charuphan Intararoong said in July that the guidelines would be published in the fourth quarter.
The Thai government is also considering selling 40 billion baht to 50 billion baht of Islamic bonds to fund infrastructure projects.
Prime Minister Abhisit Vejjajiva has advocated more development aid for the region, where separatists have fought for an independent state since Thailand formally annexed the autonomous Malay-Muslim sultanate in 1902.

Demand for Islamic bonds from the Middle East will return to “pre-crisis” levels by the end of the third quarter as companies restructure debt and higher yields lure investors, according to Citigroup Inc.
Shariah-compliant bond sales from the Persian Gulf are rising after Dubai World, the state-owned holding company, reached an agreement with 99 percent of its creditors in September to change terms on $24.9 billion of debt. Economic growth in the Middle East and North Africa will accelerate to 5 percent in 2011 from 3.8 percent this year and 1.1 percent in 2009.

The chief executive of the Association of Consultancy and Engineering (ACE) has warned companies to write off “sukuk” bonds from indebted Dubai developer Nakheel.
Nakheel is finalising a plan to pay creditors 40% in cash up front, and 60% in sukuk bonds, which are redeemable in five years and pay a return of 10% a year.
Nakheel chief executive Chris O’Donnell told conference delegates, many of whom are still owed money, that the developer would reach an agreement on the plan with creditors before the end of the year, after which the sukuk would be issued.

Taylor Wessing's Islamic Finance team has been commended in the Financial Services section of the 2010 FT Innovative Lawyers report for its development of a tax law to benefit Islamic finance. The team collaborated with Clifford Chance to lobby the UK government to ensure that the UK tax regime could operate as intended to keep London as the western centre of Islamic finance.
Tax Partner Peter Jackson and Corporate Partner Hamid Yunis led the Taylor Wessing team to resolve complicated tax issues surrounding a property financing transaction Sukuk al Ijara.

Australia plans to change laws to ensure Islamic finance products are taxed fairly as the government seeks to attract investors from the Middle East and Asia, paving the way for sukuk sales.
The national taxation board will hold talks next month in Sydney, Canberra and Melbourne on how to best ensure that Islamic finance transactions are treated the same as equivalent non-Islamic deals. The board noted this month that mortgages that comply with religious principles may lead to stamp duty being paid twice, as the financier buys the property and then sells it to his client. Under a conventional mortgage there is only one sale that attracts the duty.
Australia is looking to join countries from Egypt to South Korea in seeking to ease barriers to Shariah- compliant products and tap the industry’s $1 trillion in assets, which the Kuala Lumpur-based Islamic Financial Services Board predicts will reach $1.6 trillion by 2012.

Jordan's first ever law covering the issuance of sovereign Islamic sukuk has been finalised and bankers and officials hope it will let the kingdom tap the fast-growing Islamic banking industry's huge pool of liquidity.
Prominent Islamic bankers, along with members of a top-level ministerial committee mandated with drafting the sukuk law, said the legislation removes legal uncertainties and would be submitted to the cabinet in as little as two weeks.
It should be passed by year end, widening Jordan's borrowing options beyond conventional public debt instruments and helping finance a growing deficit, worsened by the global downturn and a fall in foreign aid that traditionally covers budget shortfalls.
Jordan has not had special laws relating to Islamic finance, but as Islamic financing expands pressure is mounting on the monetary authorities to apply sharia compliant legislation.
Assets of the three existing Islamic banks in Jordan alone amount to around 12 percent of the total banking system and their financing accounts for over 16 percent of total credit.

Indonesia is under pressure from banks to match tax breaks and product offerings announced by Malaysia last week to catch up in developing Islamic finance.
Malaysia has the largest market for sukuk and is a global hub for the Islamic finance industry that manages $1 trillion of assets. The government will cut taxes on Shariah-compliant transactions next year to promote “innovation in Islamic securities".
Indonesia failed to sell all of the government sukuk it offered in an auction on Oct. 5, even after suspending sales for two months because investors demanded higher yields than the government was willing to offer.
Malaysia in the past year has issued permits to global investors including Aberdeen Asset Management Plc and Franklin Templeton Investments to start Islamic fund management. The funds, which will invest in ringgit and non-ringgit denominated assets, will be exempt from paying taxes until 2016, according to the central bank.

Saudi firms may launch 10 Islamic bonds, or sukuk, in 2011, more than double their number this year, but they will be dominated by private placements.
Key factors that will spur demand for Saudi sukuk issues will be a low interest rate environment in Saudi and Dubai World's restructuring accord with 99 percent of its bank lenders as well as Dubai's successful $1.25bn conventional bond issue in late September.
Saudi Arabia has had four sukuk issues this year so far, Nisar said, but declined to comment on the expected size of issues and only cited Jeddah-based Islamic Development Bank (IDB) and an Aramco-Total joint-venture as being among the prospective issuers.
The interest rate environment in Saudi Arabia -- the main repo interest rate stands at two percent -- might seem discouraging for prospective sukuk buyers.

Standard & Poor's Ratings Services said that it believes that the sukuk market has grown large enough to support a transformation in the Islamic fund industry.
The report is titled "Sukuk Funds Poised To Grow As Sukuk Market Continues To Expand".
The sukuk market returned to growth in the first half of 2010. Global sukuk issuance topped US$13.7 billion during this period, nearly twice the US$7.1 billion recorded during the same period last year.

Noor Islamic Bank expects to close a “healthy number” of Islamic syndicated loans and Islamic bonds in the first half of 2011, with Turkey emerging as an active market for Islamic finance.
Aamer Zaidi, head of corporate banking at Noor Islamic Bank, said on Wednesday that the company is involved in a few sukuk issuances in the Gulf region and is also working on syndicated loans within the UAE.
The Gulf sukuk market is poised for a revival as large corporate and supra-national issues come to market following Dubai World’s restructuring accord with 99 percent of its bank lenders as well as Dubai’s successful $1.25 billion conventional bond issue in late September.

Islamic banking in Malaysia, the world’s biggest market for sukuk, rose 21 percent in the first seven months of 2010 from a year earlier, and accounted for 20 percent of the total, the government said in a report.
The Southeast Asian nation, where about 60 percent of the 27 million population are Muslim, lowered foreign-ownership limits in financial institutions in 2009 to attract more international investors. The central bank has issued Islamic licenses over the past year to global funds that include Aberdeen Asset Management Plc and Franklin Templeton Investments.

Global Islamic bonds are poised to extend gains after climbing to a record this week, buoyed by Asian economic growth and a pickup in Persian Gulf issuance.
Dubai Electricity & Water Authority, the government run utility, sold $2 billion of non-Islamic senior unsecured debt yesterday in its largest dollar denominated bond sale.
Islamic Development Bank, a Jeddah based multilateral lender, plans to sell $1 billion of bonds this quarter under a $3.5 billion sukuk program, Vice President Abdul Aziz Al Hinai said August 24. Saudi Arabian Oil Co, based in Dhahran, Saudi Arabia, and Total SA, based in Paris, plan to sell $1 billion in sukuk this year, Simon Eedle, global head of Islamic banking at Credit Agricole SA, the lead arranger of the sale.

Last year, the emirate issued another $400m worth of sukuk. The government of Dubai in September launched its first sovereign bond issue since a debt crisis.

Saudi Aramco and France's Total will launch $1 billion Islamic bond (Sukuk) in the Q4 to build 400,000 barrels per day crude refinery in Jubail.
Simon Eedle, global head of Islamic banking at Credit Agricole, said the long delayed $1 billion Sukuk which was part of the financing for the Jubail refinery will launch in the Q4. Credit Agricole, Deutsche Bank and Samba Financial Group are the lead arrangers for the Sukuk.
Global Islamic bonds are poised to extend gains after climbing to a record this week, buoyed by Asian economic growth and a pickup in Gulf issuance.
Gulf sales of Sukuk, which pay asset returns, are rising after Dubai World reached an agreement with creditors last month to change terms on $24.9 billion of debt. Companies in the region plan to issue about $5.8 billion of Islamic debt in the fourth quarter, the most for the period in three years.

After a lengthy delay, the government is on track to issue Kazakhstan’s first sovereign sukuk, or Islamic bond, before the end of this year – a key step in the country’s desire to become a regional financial hub, says Arken Arystanov, head of the Regional Financial Centre of Almaty City (RFCA).
Amendments to Kazakhstan’s law on Islamic finance and banking, currently being considered by parliament, are due to be adopted within the next two months, Arystanov says, paving the way for the government to issue its debut sukuk - most likely in the $500m range - by the end of 2010.
It’s certainly true that for some Kazakh companies there has been no difficulty in raising money by traditional means recently. State nuclear company Kazatomprom’s debut Eurobond in May 2010 was eight times oversubscribed; the issue by national rail operator Kazakhstan Temir Zholy in September was seven times oversubscribed.

From being a small and unimportant Islamic bank established in 1978 and under the loyal and unbroken stewardship of the seasoned General Manager Musa Shihadeh, Jordan Islamic Bank (JIB) has, over the last three decades transformed itself into the largest Islamic lender and the third largest domestic bank in Jordan. This is by all standards impressive given that JIB's main competitor in the market is the mighty Arab Bank Group, one of the largest banks in the Middle East and which has its own dedicated Arab International Islamic Bank.
The Ministry of Finance and the Central Bank of Jordan have given the go-ahead for Al-Rajhi Bank in Jordan to explore the possibility of issuing a sukuk. Assuming that the Treasury and the central bank are working on introducing enabling legislation for sukuk origination and listing in Jordan, this would open up new avenues of raising finance and investments for the likes of JIB.

Gatehouse Bank, London-based Shariah-compliant wholesale bank, is planning to launch a £70 million (Dh410m) Islamic bond (sukuk) next month.
In an exclusive interview with Emirates 24|7, Fahed Boodai said the sukuk is targeted at the UK corporates and is expected to be completed in November.
Simon Eedle added that the time is also right for sukuk issuances outside of the Gulf region and he expects more investment money from the West to tap the Islamic finance market in 2011.

The growing demand for securities that meet Islamic religious principles may lead Canadian governments and companies to start issuing Shariah bonds.
HSBC Bank Canada may offer $500 million and three government-related borrowers from one Canadian province may issue $1.5 billion of sukuk, Omar Kalair, chief executive officer of Toronto-based UM Financial, said in an Oct. 14 interview. A “handful” of Canadian companies may sell C$1 billion ($980 million) of Islamic debt by 2013, said Daud Vicary Abdullah, global Islamic finance leader at Deloitte Corporate Advisory Services Sdn. in Kuala Lumpur.
Egypt, Nigeria, the Philippines and Thailand have announced plans to sell their first sukuk in the past three months, partly to tap Persian Gulf oil wealth.