IslamicFinance.de

The make-up of Islamic banks' loan books is changing in Pakistan and Indonesia with the growing use of profit-sharing contracts that could help Islamic finance win more customers in the two largest Muslim-majority countries. Murabaha has been the workhorse of Islamic bank financing globally, but after years of dominance the structure is losing favour in some areas to profit-sharing contracts such as musharaka, istisna and salam, which are seen by many scholars as closer to the economic principles of Islam. In Indonesia, the change is more gradual as murabaha still represents over half of all financing by Islamic banks.

A Taliworks Corporation Bhd joint venture has received the Securities Commission’s approval for the proposed issuance of the RM210mil Sukuk Murabahah. Taliworks said the Sukuk would be issued by Grand Sepadu (NK) Sdn Bhd, a joint venture in which it has a 75%. The proceeds from the issuance of the Sukuk Murabahah will be utilised to facilitate the roll-over of the short term syndicated bridging loan facility of up to RM200mil undertaken by GSNK into the Sukuk Murabahah and for working capital purposes. Taliworks said Hong Leong Investment Bank Bhd is the principal adviser and lead arranger for the Sukuk Murabahah.

Dentons has advised Ajman Bank on $155 million Islamic financing facilities made available by a syndicate of banks. The facilities comprise of a dual commodity Murabaha and Wakala arrangement with a two year lifespan. Noor Bank acted as the arranger and bookrunner for the deal, and along with Emirates Islamic Bank, First Gulf Bank, United Arab Bank and Warba Bank which participated in the facilities. This transaction follows on from the $200 million Shari’ah-compliant syndicated facility to Ajman Bank that Dentons worked on in December 2014.

Kuwait's Warba Bank has successfully arranged a US$150 million, Sharia-complaint syndicated finance facility for the International Bank of Azerbaijan ("IBA"). The facility has a tenor of one year with a bullet repayment due at maturity. Warba Bank has participated in this transaction with a stake of US$20 million in a consortium of six regional and international banks: J.P Morgan Bank, Citigroup, Barwa Bank, Al Hilal Bank, Noor Bank and Dubai Islamic Bank. In addition, Warba Bank has also announced its contribution of US$15 million in an Islamic Sharia-complaint facility amounting US$80 million arranged by HSBC for the Turkish Ozun Group. Moreover, the Bank sold its real estate investment in West Bromwich in the United Kingdom achieving net profit of KD 640 K.

Islamic lender Kuveyt Turk has launched a $250 million dual-currency murabaha loan into general syndication. The sharia-compliant loan, which can be denominated in dollars or euros, is split into a one-year tranche and a two- tranche paying an interest margin of 80 basis points (bps) and 100 bps, respectively over three month Libor/Euribor. Arab Banking Corporation, Abu Dhabi Commercial Bank, Barwa Bank, Emirates NBD, Noor Bank and Qatar Islamic Bank are mandated lead arrangers and bookrunners on the deal. The loan will be used for general corporate purposes and is due to close by the end of the year.

Malaysia Building Society Berhad (MBSB) is planning a second issuance of its structured covered sukuk commodity murabaha programme. The proposed deal will come nearly a year after the government-owned company sold a debut RM495 million multi-tranche transaction via sole lead manager RHB Investment Bank. The second issue is targeted to raise up to RM700 million. MBSB is hoping to extend the tenors to 10 years in the new issue. The bonds are rated AA1, higher than the A2 corporate rating for MBSB. RHB will be leading the deal again, and may be joined by one or two other banks. The deal is expected to close by the end of the year.

IIFM through its research and industry consultation process has managed to develop a Master Collateralized Murabahah Agreement that has been designed to meet the urgent requirements of the Islamic Financial Services Industry. The MCM Agreement is a master agreement which sets out terms upon which the parties to the MCM Agreement (Parties) can subsequently enter liquidity management arrangements. Its main objective and each subsequent Collateralized Murabahah Transaction is to allow a Buyer an opportunity to raise liquidity by creating security over its Shar'ah compliant assets. Find more information in the attached pdf file or on the website www.iifm.net.

UAE-based Aafaq has carried out its first transaction on the NASDAQ Dubai Murabaha Platform, which provides Islamic financing services to individual and institutional customers. Officially launched in April 2014 by NASDAQ Dubai jointly with Emirates Islamic, the platform has completed a total of more than AED 21 billion of transactions. The platform makes use of Shari’ah-compliant Certificates that have been developed for the underlying assets of the financing transactions. Islamic banks, Islamic windows of conventional banks, and Islamic finance companies and their clients can make use of the platform through trading Certificates.

Malaysia is adjusting its tax structure to favour issues of some types of Islamic bond. The move could attract more foreign issuers and investors to its market. The Malaysian sukuk market is already the world’s largest, accounting for two-thirds of total global issuance of about $100 billion so far this year. But the market consists largely of local-currency deals which tend to rely on government-linked institutions as ready buyers.
The effect of the tax changes may be to shift some issuance away from murabaha and encourage the use of ijara and wakala, making the Malaysian market more closely resemble the Gulf.

Eiger Trading launched the first ever fully-automated, Shariah-compliant 24/7 Commodity Murabaha platform, in conjunction with Gulf International Bank’s (GIB) KSA retail arm, under the ‘Meem’ brand name. This fully-automated Islamic e-banking solution offers 24/7 online personal finance and deposits to retail clients in the Kingdom of Saudi Arabia. Eiger and GIB’s combined technology provides online customers with a 24/7 real-time mechanism for executing Shariah-compliant transactions, using commodities all of which are located and deliverable within the Kingdom.

Latham & Watkins advised Etihad Etisalat Company (Mobily), a telecommunications operator in the Kingdom of Saudi Arabia, in connection with a $200m murabaha facility made available by Export Development Canada. The facility will be used by Mobily to purchase eligible goods and services supplied to it by affiliates and subsidiaries of Alcatel Lucent S.A., including Alcatel Lucent, Canada Inc. This transaction represents Mobily’s third ECA-backed Islamic financing following on from its $646m murabaha facility with the support of Exportkreditnämnden and Finnvera plc in August 2013. In 2014 Latham & Watkins advised Mobily in connection with its $561m murabaha facilities made available by Exportkreditnämnden and Finnvera plc.

United Arab Bank (UAB) has announced the completion of a 3-year syndicated Murabaha facility worth US$100m with four banks based in the UAE, Bahrain, and Kuwait. The Murabaha deal is the first Islamic syndication completed by UAB. Al Hilal Bank , headquartered in the UAE, served as the Mandated Lead Arranger and Bookrunner for the deal, while the Arab Banking Corporation, headquartered in Bahrain and Sharjah Islamic Bank, were the other Mandated Lead Arrangers. The National Bank of Kuwait also served as a Lead Arranger. The syndicated Murabaha facility which has been taken out for general corporate purposes, was almost twice oversubscribed.

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Contents
Revised Shariah Screening Methodology: 1
Expands ICM’s Global Reach
SHARIAH
New Shariah Advisory Council Resolutions 3
DEVELOPMENT
Region’s First Structured Covered Sukuk 7
Royal Award for Islamic Finance Calls for Global 9
Nominations
SC and Autoriti Monetari Brunei to Strengthen 9
Efforts in Greater Cross-border Activities
SC Leads Islamic Finance Taskforce to Publish a 10
Report on Enhancing Infrastructure for ICM
REGULATORY
IFSB-IOSCO-SC Collaborate on Disclosure 11
Requirements for ICM Products
SC Revises Equity Guidelines for SPACS 12
Technical Note on the Application of SC’s 13
Guidelines In Relation to Non-Tradable and
Non-Transferable PDS and Sukuk
FEATURES
2013: Another Resilient Year for the Global 14
Islamic Finance Industry
Global Islamic Funds Industry: Achieving 18
Growth Under Challenging Times
Harmonisation of Shariah Rulings 22
in Islamic Finance
News Round-up 29
STATISTICAL UPDATES
Malaysian ICM – Facts and Figures 32
Free download below at source:

Sharjah Islamic Bank (SIB) has joined NASDAQ Dubai’s Islamic financing Murabaha platform, which offers bank customers solutions for processing Sharia’a-compliant financing transactions. SIB is the first bank to join the facility since the official launch of the NASDAQ Dubai Murabaha Platform last month. Through the NASDAQ Dubai Murabaha Platform, individual and institutional clients of SIB will be able to complete financing transactions within minutes. The platform is an alternative to many traditional Islamic financing solutions, which can carry a risk of losses through price movements, spreads and poor liquidity as well as delays.

Murabaha Company inked a deal with Saudi-Kuwaiti Finance House (KFH-Saudi) to serve as its financial advisor, in order to plan and take steps towards the company’s goal to offer 30% of its shares for public offering. KFH-Saudi CEO Tarek Al-Rekheimi said that the bank will, according to this agreement, offer all financial consultations regarding the evaluation of the company, and the preparation of all documents, as per regulations. He went on to say that the bank works with several Saudi corporations to enlist them in the Saudi market during the coming period. He stressed that the increase in number of companies expected to be offered during the coming period, will play a significant role in reinforcing the Saudi bourse, not to mention opening commercial and financial channels for those companies, in order to diversify forms of financing.

Cagamas, the Malaysian mortgage corporation, has issued RM500 million three-month Islamic commercial papers (ICPs), its first ICP for the year. Proceeds from the murabahah ICPs will be used to fund the purchase of Islamic financing from the financial system. Investors' preference for high grade issues and short duration investment strategy results in strong demand for the company's three-month ICPs particularly from financial institutions with a bid to cover ratio of over 2.4 times and competitively priced at three-month KLIBOR. The ICPs, which will be redeemed at their full nominal value on maturity, will be listed and tradable under the Scripless Securities Trading System.

AmIslamic Bank, subsidiary of AMMB Holdings, has received the necessary approvals from both Bank Negara Malaysia and the Securities Commission of Malaysia to set up a subordinated Sukuk Murabahah programme with a value of RM3bn. The subordinated Sukuk Murabahah programme has a tenor of up to 30 years from the date of issue and each tranche will have a tenor of five years minimum. In a market filing the issuer said that RAM Rating Services had assigned a preliminary long-term rating of 'AA3' to the Subordinated Sukuk Murabahah under the programme.

For many years we see in the media experts believing in inflation and even hyper inflation. However, in the same time we face proponents warning against deflation. So far we all noticed.

Only a about a week ago I read an article by Myret Zaki clarifying that unfortunately inflation and deflation co-exists.

Myret Zaki's thesis is that we face inflation on financial markets, and deflation in the real economy (in French):

http://www.bilan.ch/myret-zaki/redaction-bilan/inflation-et-deflation-co...

In my view there is a general major shift in the price matrix and I still try to figure the magnitude and implications thereof. It is a bit irritating as at University we learned about neutrality of money:

http://en.wikipedia.org/wiki/Neutrality_of_money

This means any extra supply will increase prices equally, 5 % more money, all prices going up 5 %. Pretty plausible at first hand. However, it seems it does not work in reality any more (or never did).

Bahraini First Energy Bank (FEB) has signed a 25-million-euro ($34 million) Murabaha facility with the Netherlands-based Kore Coal Finance, a subsidiary of Sapinda Holding. The financing will assist Sapinda in enhancing its investments in an internationally operating resource company which owns coal mining assets in South Africa. This Islamic facility supplements the recently concluded conventional profit participation note of 55m euros raised by Kore Coal Finance with a similar objective. The Murabaha facility has been structured on the basis of an attractive return and will be repaid by October 2016. FEB is acting as the investment and security agent under this Murabaha financing. The bank has an authorised share capital of $2 billion and a paid-up capital of $1 billion.