IslamicFinance.de

UDA Holdings Bhd has signed financing agreements with financial institutions for a syndicated Islamic financing facility of up to RM500mil to finance its eight projects with an estimated gross development value (GDV) of RM1.62bil. The financiers are Affin Islamic Bank Bhd, AmBank Islamic Bhd, RHB Islamic Bank Bhd, Bank Pembangunan Malaysia Bhd and Kuwait Finance House (M) Bhd. UDA managing director Datuk Ahmad Abu Bakar said the finance facility would be use to partly fund the construction of the projects nationwide and the rest would be funded by sales. The eight projects comprise commercial and residential developments.

Malayan Banking Bhd (Maybank) has appointed Datuk Mohaiyani Shamsudin as chairman of Maybank Investment Bank and Datuk R Karunakaran as Chairman of Etiqa Insurance Bhd (EIB) and Etiqa Takaful Bhd (ETB). Maybank said the changes in chairmanship of its key subsidiaries followed the retirement of some directors. Mohaiyani is currently a director of Maybank. She is also the chairman of Maybank Asset Management Group Bhd and Maybank Asset Management Sdn Bhd. Karunakaran is a director of Maybank and currently sits on the boards of Maybank (Cambodia) Plc, and others. In addition, he is a director of Bursa Malaysia Bhd, IOI Corporation Bhd and Integrated Logistics Bhd.

Axiata Group Bhd’s 10-year US$500mil Sukuk received strong response with a final book of over US$900mil orders. The telco company said this was a bid-to-cover ratio of over 1.8 times, and a final yield of 4.357%. The bookbuilding exercise commenced with an initial price guidance of US Treasuries (“UST”) + 2.60% area. Demand for the Sukuk issuance led to a final price guidance of UST + 2.45% area ± 0.05% at Asian close/London mid with books in excess of US$1.4bil. The Sukuk would be issued by its Malaysian-incorporated special purpose vehicle, Axiata SPV2 Bhd. Proceeds of the Sukuk Issuance will be utilised to fund the proposed acquisition of Ncell Pvt. Ltd.

National mortgage corporation Cagamas Bhd is issuing its second Singapore dollar-denominated sukuk worth S$150mil. The sukuk, to be issued through subsidiary Cagamas Global Sukuk Bhd, will be fully and unconditionally guaranteed by Cagamas. The issuance, with a maturity of one year, comes under Cagamas’ US$2.5bil multicurrency sukuk issuance programme. The proceeds of the sukuk will be used to fund the purchase of Islamic home financing from the financial system. The issuance will bring the company’s aggregate issuance for this year to RM3.2bil.

The Securities Commission Malaysia (SC) will launch the Islamic fund and wealth management blueprint sometime this year, in a bid to firmly establish Malaysia as an international Islamic capital market centre. The blueprint, which is formulated by the SC, will chart the medium to long term strategic direction for the industry as well as map out strategies and recommendations to strengthen Malaysia's competitive edge, said the SC. The strategies are expected to reinforce the industry's sustainability and will include, among others, strengthening global capabilities of market intermediaries and seizing new market opportunities.

Petroliam Nasional Bhd (Petronas) is enjoying a twin boost as commodity prices rally and Islamic bond costs fall just as it considers borrowing. The difference in yield between 10-year government sukuk and two-year securities shrank to a five-month low of 91 basis points last week from as high as 128 in early January, making longer-term financing attractive for issuers such as Petronas. That’s been helped by record foreign purchases of ringgit government bonds last month, a rally in the currency and a recovery in Brent crude. Petronas last month posted its third loss in five quarters, announced plans to cut 1,000 jobs and said it might need to raise funds and tap cash reserves to cover capital expenditure and dividends.

Global sukuk market is expected to remain fairly resilient at around US$55bil to US$65bil (RM231bil to RM273bil) this year compared with US$66.4bil last year, despite ebbing global market sentiment, particularly in Malaysia amid the weaker ringgit, according to RAM Ratings. Given the steep fall in crude oil prices that have adversely affected the core sukuk markets of Malaysia and the Gulf Cooperation Council (GCC), the rating agency’s projection takes into account these countries’ government expenditure cuts and potential delays in infrastructure spending. Malaysia’s global leadership last year was underscored by US$23bil of sukuk issuance from corporate and quasi-government sectors.

Khazanah Nasional Bhd has priced a 5-year US$750mil (RM3.15bil) US dollar-denominated straight sukuk to refinance Penerbangan Malaysia Bhd guaranteed notes at a significantly lower cost. The USD sukuk will be issued via Danga Capital Bhd. The USD sukuk was priced at a profit rate of 3.035% following an accelerated bookbuilding process which attracted demand of 1.5x booksize from financial institutions, asset management companies, statutory bodies and insurance companies. Khazanah achieved its target issue size at a spread of 178 basis points above prevailing 5-year US Treasuries. CIMB and DBS Bank Ltd are the Joint Global Coordinators while CIMB, DBS Bank Ltd. and Standard Chartered Bank are Joint Bookrunner.

Malaysia’s Maybank Islamic Bhd says the investment account (IA) business is set to be a game changer for the group in its effort to boost earnings growth amid the subdued banking landscape. The Islamic lender, which has total assets worth close to RM147bil, will focus on its new mudarabah (profit-sharing) investment fund launched in July last year in view of the Islamic Financial Services Act (IFSA) 2013. Describing the IA business as “the evolution of the next phase of growth”, Maybank Islamic chief executive officer Datuk Muzaffar Hisham said that demand for the IA business has shot up significantly, as the value of its mudarabah fund rose to RM18bil in the last six months of 2015.

International Islamic Liquidity Management Corp (IILM) plans to sell US$1.34bil (RM5.54bil) of three-month bills, its biggest offering since being set up in 2010 to support syariah-compliant financial activity. The Kuala Lumpur-based institution would auction the Islamic notes on Feb 18, it said in a statement. IILM has a short-term issuer rating of A-1 from Standard & Poor’s, and has sold a total US$14bil of debt denominated in the US currency. While IILM has increased issuance of short-term paper each year since its debut offering in 2013, the supply is far short of the US$400bil that Ernst & Young LLP estimates is needed to help Islamic banks manage their liquidity.

A potential listing of Bank Muamalat Malaysia Bhd could be an option should its major shareholder DRB-Hicom Bhd fail to find a suitable suitor to buy up a stake in the bank. The requirement to pare down DRB-Hicom’s stake in Bank Mualamat is to comply with Bank Negara’s requirements from current 70% to 40%, which has been delayed for a few years. Last week, the proposed merger between Malaysia Building Society Bhd (MBSB) and Bank Muamalat was called off as the parties involved were not been able to reach an agreement on the terms and conditions. Disagreement over valuations and control were believed to be factors that led to the breakdown of negotiations that began last October.

The Employees Provident Fund (EPF) plans to launch its first fully syariah-compliant fund by January 2017 with an initial fund size of up to RM120bil. Those who are interested in converting their savings to full shariah compliance status can do so on a first come first serve basis, EPF deputy chief executive officer of investments Datuk Mohamad Nasir Ab Latif said. The pension fund’s total investment assets grew to RM667.56bil as at September last year. Its total income for the first nine months of last year amounted to RM31.58bil. 51% of the EPF’s portfolio mix comprise of fixed income investments, while 43% is from equities. The remainder is for real estate and infrastructure as well as other investments.

The proposed merger of Malaysia Building Society Bhd (MBSB) and Bank Muamalat Malaysia Bhd, to create the country’s biggest standalone Islamic bank has fallen through. MBSB said on Tuesday that after a series of discussions and negotiations, the financial institution and the shareholders of Bank Muamalat -- DRB-Hicom Bhd and Khazanah Nasional Bhd – have not been able to reach an agreement on the terms and conditions of the proposed merger. Accordingly, the parties have mutually agreed to end all discussions and not proceed with the proposed merger. The deadline for the proposed merger between MBSB and Bank Muamalat was on Tuesday.

Bank Islam Malaysia Bhd (BIMB) expects slower growth in 2016 compared to last year amid the current economic challenges, according to managing director Datuk Seri Zukri Samat. He said he hoped the bank will maintain double-digit growth in terms of financing performance as achieved last year. Asked on plans to open more Bank Islam branches this year, Zukri said the bank was still assessing the current economic situation. He said the bank was eyeing 600,000 payWave debit cards issued in 2016, up from 200,000 cards issued by end-December 2015. Zukri said the bank had invested millions of ringgit in the “E-donation” Terminal Using Visa PayWave programme, and aims to provide these terminals to 10 mosques nationwide, including in Sabah and Sarawak.

Prime Minister Datuk Seri Najib Tun Razak’s goal of reining in the budget deficit looks set to get tougher as a unit of the nation’s biggest lender predicts borrowing costs on Islamic bonds will climb to a record. Maybank Islamic Asset Management says benchmark sukuk yields may rise to 5% this year should the United States raise interest rates to 1.25% from a maximum 0.5% now, and if investors price in further tightening in the following 12 months. Higher yields on government debt may complicate Najib’s efforts to fund a US$444bil development programme to build railways, roads and power plants. The ringgit is already down 2.2% in 2016 as a selloff in Chinese stocks sparked risk aversion.

The government is making it easier for the public to save for their higher education through its National Education Savings Scheme SSPN-i Plus. The SSPN-i Plus, which was introduced by the National Higher Education Fund Corporation (PTPTN) in June, doubles as an education fund besides providing affordable Takaful (Islamic insurance) coverage to the depositor. The product, a result of the strategic collaboration between PTPTN and Hong Leong MSIG Takaful (HLM Takaful), aims to instil in Malaysians the savings culture. The government has also provided a variety of exemptions for taxpayers to reduce their tax burden, with 21 tax exemptions given to taxpayers for the 2015 assessment year.

Malaysian central bank Governor Zeti Akhtar Aziz prepares to leave in April after three decades at the central bank. Whoever is chosen as her successor will have very big shoes to fill, said Wellian Wiranto, an economist at Oversea- Chinese Banking Corp. in Singapore. This is especially so since the global environment remains uncertain and Malaysia is deemed relatively vulnerable to swings in global investor sentiment -- in part due to domestic political rumblings. Zeti served as a deputy governor before she took the top job in 2000. The central bank declined to comment on whether any of the three current deputies are in the running this time.

Industrial packaging and property-based Scientex Bhd has proposed to set up a Sukuk Murabahah programme to issue up to RM500mil and it will have a tenure of up to 15 years. Its unit Scientex Quatari Sdn Bhd has lodged with the Securities Commission all the required information and relevant documents. The programme would enable Scientex Quatari the flexibility to raise funds via the issuance of Sukuk Murabahah from time to time which can be used to finance or to repay land and property investments. Other plans for the programme are to fund working capital requirements and to refinance existing bank borrowings. RHB Investment Bank Bhd is the principal adviser, lead arranger, lead manager and facility agent for the programme.

Qatar National Bank (QNB) has halted preliminary talks with Kuwait Finance House (KFH) to buy its Malaysian unit, the Gulf Arab region's largest bank said. An agreement has not been reached. Earlier, KFH's chief executive Mazin al-Nahedh had said the bank had ruled out a sale or merger for its Malaysian unit, adding the largest Islamic bank in the Gulf Arab state will begin restructuring the unit with immediate effect. The disclosure from KFH comes after a source familiar with the matter said last week that QNB had bid to buy the unit, with the Qatari lender later acknowledging it was in early talks about an acquisition.

Oil and gas player SapuraKencana Petroleum Bhd has made its first issuance of US$200mil (RM845.8mil) sukuk under the multi-currency sukuk programme. The company said in a filing with Bursa Malaysia that its unit SapuraKencana TMC Sdn Bhd (SKTMC) will use the proceeds to refinance some existing debt. The sukuk offering is the first to be launched under the new Securities Commission Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework effective June 15, 2015. The company announced last week that SKTMC had signed the transaction documents for the inaugural multi-currency Islamic medium-term note.