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Fitch Ratings has affirmed the rating of The Goldman Sachs Group Inc.'s (GS) JANY Sukuk Company Limited (JANY) guaranteed trust certificate issuance programme at 'A'. The certificate programme's rating is equalized with GS's Issuer Default Rating (IDR) of 'A'. GSs ratings continue to be supported by its investment banking franchise, solid liquidity position, better-than-average capital position, and strong risk management. The ratings are constrained by GS's focus on capital market activities and relatively higher wholesale funding. The rating of the programme will be influenced by changes in GS's long-term IDR.

Fitch Ratings has revised the Outlooks on Al Rajhi Bank (ARB), National Commercial Bank (NCB), Riyad Bank (RB) and SAMBA Financial Group (SAMBA) to Negative from Stable. The revision of the banks' Outlooks to Negative reflects that their Long-term Issuer Default Ratings (IDR) are at the Support Rating Floor (SRF) for Saudi domestic systemically important banks (D-SIB) of 'A+'. This would be revised down to 'A' in the event of a one-notch downgrade of the Saudi sovereign. The Saudi banks' Support Ratings (SRs) and SRFs reflect the extremely high probability of support from the Saudi authorities, if required. Upward potential for the ratings is limited in light of a weakening sovereign and operating environment.

Fitch Ratings says in a new report that total new bonds and Sukuk (with a maturity of more than 18 months) from the GCC, Malaysia, Indonesia, Turkey, Singapore, Pakistan, Sri Lanka, and Taiwan (GCC+7) declined 27 per cent in 1H15 from a year ago. Bonds were down 30 per cent and Sukuk by 16 per cent. In 2Q15 Sukuk accounted for 20 per cent of total new issuance, marginally up from 18 per cent in 2Q14. The decline is driven by falling oil prices, challenging external funding conditions due to the expected Federal Reserve interest rate hike, and uncertainties over Greece during 2H15. These factors have led to increased volatility in global financial markets.

Effective regulation and supervision of Islamic banks achieved through a dedicated unit of the Central Bank of Oman (CBO) is positive for the sector as it should strengthen early detection of risks and support growth, Fitch Ratings said. The central bank inaugurated its specialist department for overseeing Islamic banking last week. The department will build up resources and expertise and centralise all aspects of Islamic banking regulation and issuance. Although the industry represents just over five per cent of total banking assets in Oman, it could grow rapidly, as it has in neighbouring countries where market shares range between 20 to 30 per cent, the ratings agency said. The global ratings agency added that a limited number of Omani corporates have issued sukuk and the country's banks may follow.

Fitch Ratings has affirmed the Islamic Development Bank (IsDB)’s Long-term Issuer Default Rating (IDR)’s at ‘AAA’ with a Stable Outlook. The Short-term IDR has been affirmed at F1+. The trust certificates issued by IDB Trust Services Ltd and guaranteed by IsDB have also been affirmed at ‘AAA’. The ratings reflect its strong capitalisation, high liquidity and low concentration risk compared with other regional multilateral development banks (MDBs). Even though some limits, such as leverage, have been relaxed, the risk framework remains stringent, and IsDB is progressively aligning it with that of other highly rated MDBs, for example through its liquidity policy. However, compared with other ‘AAA’-rated MDBs, provisioning is fairly low given the bank’s exposure to countries experiencing deep political troubles.

The recent decline in oil prices has sparked expectations that Saudi Arabia may issue domestic sovereign debt this year for the first time since 2007. Much of this debt would probably be long term and would be bought by the country’s banks. Sovereign debt issuance would create another benefit for potential corporate issuers by helping create a pricing benchmark. Another factor that is likely to spur Saudi sukuk issuance in the medium term is the Capital Market Authority’s plan to reform the corporate debt market, including measures to make regulatory approval of debt products easier. The main factor likely to slow or limit sukuk growth is higher initial costs compared to other forms of borrowing.

Fitch Ratings has assigned Indonesia's proposed sovereign global certificates (sukuk) issued through Perusahaan Penerbit SBSN Indonesia III (PPSI-III) an expected 'BBB-(EXP)' rating. The expected rating is in line with Indonesia's Long-Term Foreign Currency Issuer Default Rating (IDR) of 'BBB-', which has a Stable Outlook. The rating reflects Fitch's view that cash flows supporting payment on the sukuk will constitute direct, unconditional, unsecured and general obligations of Indonesia, ranking equally with Indonesia's unsecured and unsubordinated marketable external debt. The rating will be sensitive to any changes in Indonesia's Long-Term Foreign Currency IDR.

Fitch Ratings expects Islamic finance to grow rapidly with more sukuk issuance. Issuance for new sovereigns may be seen from Jordan, Tunisia and even Egypt this year. Fitch Ratings said in a new report that the total new sukuk from GCC+7 issuers rose 13 per cent year-on-year in the first quarter. Total sukuk and bond issuance in the first quarter were up 47 per cent from the fourth quarter when volumes were exceptionally weak, due to falling oil prices and rising geopolitical tension. In the first quarter, the total sukuk issuance volume rated by Fitch grew 3.5 per cent to US$45.1 billion.

The G20 group of nations' decision to examine the use of sukuk to finance infrastructure investment could eventually spur a big increase in the size of the market, Fitch Ratings says. But several significant challenges would need to be overcome first, most importantly finding a legal structure that would be acceptable to governments, investors and the sukuk's Sharia boards. One of the main uncertainties is whether sovereign issuers will be willing to directly pledge infrastructure assets to sukuk investors or accept the most common structure, known as Ijarah sukuk. Alternative structures could be found, but it would take longer to achieve and could see slower take-up, especially as innovative structures would have to be approved by a Sharia board.

Fitch Ratings has appointed Bashar Al Natoor as Global Head of Islamic Finance, based in Dubai. In this new role, Mr. Al Natoor will coordinate all Islamic Finance activities and expertise across Fitch's Sovereign, Financial Institutions, Corporate, Structured Finance, Infrastructure and Insurance teams. As well as being involved in the rating process of Islamic Finance instruments, the Islamic Finance Group will continue to monitor and report on this sector, produce research and commentary as well as criteria development. Mr Al Natoor has more than 14 years' experience in the Islamic Finance market. Since joining Fitch in 2007, he has overseen Fitch's Sukuk criteria and Islamic Finance practices, undertaken research and written numerous published articles on Islamic Finance.

Fitch Ratings has warned that a merger plan by Malaysia’s second largest bank CIMB Group with RHB Capital Bhd and Malaysia Building Society Bhd (MBSB) to create the country’s biggest lender is fraught with risks. Fitch said the merger could weaken capital buffers for CIMB if not funded by sufficient new equity, adding that any move to rationalise branches and staff could be “politically unpalatable”. Furthermore, weakening credit growth and asset-quality pressures in the overall banking system will not make the process any easier. On the other hand, a successful merger would provide a stronger domestic platform from which CIMB’s offshore aspirations could continue to expand.

Fitch Ratings has upgraded Luxembourg-based ATLANTICLUX Lebensversicherung S.A.'s (ATL) Insurer Financial Strength (IFS) rating to 'BBB+' from 'BBB'. Moreover, its Long-term Issuer Default Rating (IDR) was upgraded to 'BBB' from 'BBB-'. The Outlook is Stable. At the same time Fitch has upgraded ATL's SQ ReVita Value of Business In-Force transaction and its Salam III Sukuk (Islamic bond) programme to 'BBB' from 'BBB-'. The upgrade reflects ATL's track record of strong profitability, low investment risk and its strong capital position. However, these positive rating factors are partly offset by ATL's dependence on unit-linked products and its fairly small size.

Fitch Ratings has affirmed the Islamic Development Bank's (IDB) Long-term Issuer Default Rating (IDR) at 'AAA' with a Stable Outlook and its Short-term IDR at 'F1+'. The affirmation and Stable Outlook reflect the following key rating factors: IDB is one of the strongest-capitalised multilateral development banks rated by Fitch, with an equity-to-assets ratio of 54% and a debt-to-equity ratio of 79.5% at end-1434H (3 November 2013). Credit risk remains moderate, other risks are manageable. Profits are moderate compared with commercial banks, but are steady and in line with peers, ensuring regular equity strengthening. Shareholder support, a secondary rating driver, remains strong.

Fitch Ratings has assigned Export Import Bank of Malaysia's (MEXIM) USD300m 2.874% sukuk due 2019 a final rating of 'A-'. The Islamic bonds are issued under MEXIM's USD1bn multi-currency sukuk programme established through EXIM Sukuk Malaysia. The sukuk rating is the same as MEXIM's Long-Term Issuer Default Rating (IDR). EXIM Sukuk Malaysia, a special purpose vehicle (SPV) incorporated solely to facilitate sukuk issues, will use the sukuk proceeds to purchase eligible assets from MEXIM. However, any deterioration in the Malaysian sovereign's creditworthiness and ratings or in the government's propensity to support MEXIM would hurt the IDR and hence the sukuk rating.

Persian Gulf government spending will help drive what may be a record year for Islamic bond sales, Fitch Ratings said, echoing HSBC Holdings Plc (HSBA) forecasts. Sales will probably match the 2012 high, the rating company said. Economic growth in the oil-rich Gulf Cooperation Council countries and possible debut Islamic debt sales from the U.K. and Hong Kong will help the long-term outlook for sukuk sales, Fitch said. Qatar’s plans for the 2022 soccer world cup, Dubai’s preparations for the Expo world fair in 2020, and Saudi Arabia and Abu Dhabi’s spending commitments should boost issuance, according to the rating company.

Fitch Ratings has affirmed UAE-based Abu Dhabi Islamic Bank 's (ADIB) Long-term Issuer Default Rating (IDR) at 'A+' with a Stable Outlook, and Viability Rating (VR) at 'bb'. The bank's IDRs, Support Rating and Support Rating Floor reflect
Fitch's opinion that there would be an extremely high probability that support would be provided by the UAE authorities if needed. In addition, Fitch believes that support would be forthcoming from the Abu Dhabi government (AA/Stable/F1+). Although Fitch expects the overall asset quality issues and exposure to a seasoning financing book to continue to present challenges in the short term, these are manageable. Fitch believes that the VR remains sensitive to any deterioration in asset quality, capital or profitability.

Fitch Ratings has assigned Al Hilal Bank's (Al Hilal; A+/Stable/F1) USD2.5bn trust certificate issuance programme a final Long-term rating of 'A+' and a final Short-term rating of 'F1'. At the same time, Fitch has assigned Al Hilal's USD500m senior unsecured fixed rate certificates (sukuk) issued under the programme a Long-term rating of 'A+'. The certificates have a profit rate of 3.267% per annum and mature on 8 October 2018. The ratings assigned to the programme and the certificates are driven solely by Al Hilal's Issuer Default Ratings (IDRs), as the sukuk structure is viewed as an originator-backed/asset-based structure. The ratings of the trust certificate issuance programme and the certificates are highly sensitive to any rating action on Al Hilal.

Fitch Ratings has assigned Al Hilal Bank's USD2,500,000,000 trust certificate issuance programme an expected Long-term rating of A+ and expected Short-term rating of F1. Key rating drivers are solely Al Hilal's Issuer Default Ratings.

Fitch Ratings has affirmed HSBC Amanah Takaful (Malaysia) Sdn Bhd's (HSBCAT) Insurer Financial Strength (IFS) rating at 'A-' with Stable Outlook and has simultaneously withdrawn the rating. The rating of HSBCAT is no longer considered by Fitch to be relevant to the agency's coverage. The rating reflects HSBC group's franchise value, distribution channel and management support. HSBC Holdings Plc (AA-/Stable) has a strong ability and willingness to provide it with continuing support. The rating also incorporates HSBCAT's conservative investment mix, healthy capitalisation, and prudent management. The rating is constrained by the takaful operator's modest size, and a limited track record amid a competitive and evolving takaful operating environment. Additionally, the company is challenged to manage its expenses effectively as it builds up its business portfolio.

Fitch Ratings has assigned Saudi Electricity Company's (SEC) upcoming international Sukuk issue a 'AA-(EXP)' expected rating. The rating is in line with SEC's 'AA-' Long-term Issuer Default Rating (IDR) and senior unsecured rating and SEC's 2012, 2010, 2009 and 2007 Sukuks' ratings. The Sukuk will be issued on an unsecured and unsubordinated basis. Among other aspects, the Sukuk benefits from a negative pledge and a cross default clause. Proceeds of the issuance will be used for general corporate purposes.