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The Irish Electricity Supply Board (ESB) considers issuing a sukuk in Malaysia which would make it the first large non-financial company from Europe to involve in trade with Islamic bonds. Issuing a sukuk is likely to contribute to the development of a new source of funding for companies in Europe while the euro zone debt crisis constrains sources of finance at home.

More on: http://in.reuters.com/article/2012/09/20/islamic-ireland-sukuk-idINL5E8K...

The market in the US and Europe is galvanized by central bank operations. Meanwhile, yield-starved Islamic investors grow more and more selective. High interest for emerging market bonds resulted in erosion of the advantage in price that sukuk enjoyed until recently. It is possible that issuers will not be able to save as much as 40bp with suku any longer. At the same time, according to S&P, borrowers have raised USD19.2bn so far in 2012.

More on: http://in.reuters.com/article/2012/09/17/idINL5E8KHMON20120917

Al Izz Islamic Bank plans to launch an initial public share offer (IPO) for 40 percent of the bank. the bank has set a goal to raise 40 million rials ($104 million) in this way. The offer will be opened on September 22 and will run for one month. Shares in Al Izz's offering will be priced at 0.1 rials each. Both local and foreign investors can make use of the shares with the condition that foreign investors are only allowed to have up to 70 percent of the offering.

Due to economic chaos in Sudan, foreign investors cannot easily receive their bond payments. There is no legal possibility to directly convert bond payments into dollars. Therefore, it is recommended to reinvest, e.g. in real estate, using the money paid out in local currency. The main reason for impossibility of payment in dollars is the independence of South Sudan in July 2011. Since South Sudan was the country's main source for oil as well as for dollars, now it finds itself cut off. The central bank hardly allows conversion of shares or bonds into dollars in order to preserve money for food imports.

The ageing population of UAE is expected to highly demand for Islamic savings products. Thereby, Shariah compliance of the products is the major factor in making a choice. National Bonds Corp offers a number of different savings products including a mudaraba fund now worth 4.6bn dirhams ($1.25bn) in assets under management. The company's future plans include the development of a range of savings which aim to satisfy the growing demand.

According to a statement by Fitch Ratings, Indonesia's consumer finance will probably see an improvement in the underwriting quality and regulatory consistency. The precondition is that Bank Indonesia harmonises prudential rules for sharia-compliant products with the ones for mainstream consumer loan products. Applying tougher loan to value (LTV) regulations to sharia products would make the competition with non-sharia products even. Moreover, asset quality diverging within the consumer finance sector would be prevented.

Islamic financial body ASAS intends to globally launch a new scholar programme with aim to improve the financial literacy of scholars and this way to prevent the slowing of the industrial growth. In addition, it should be developed a global code of etics, in order to improve standards in the industry.

New takaful rules have been introduced by Pakistan's regulator. They were designed to boost competition and to lift the sector's market share by allowing the entry of conventional players. Consequently, Pakistan became the second country after Indonesia to officially allow takaful windows. Since the introduction of the first rules in 2005, Takaful has operated without conventional competitors in Pakistan. However, those rules allowed windows after a five-year period. As the securities commission said last month, conventional insurance firms could serve a vaster share of the takaful market.

The Islamic trade industry neglects trade finance and leaves it to the domination of conventional banks. Direct lending is preferred over trade business. The youth of Islamic banks is pointed out as the mail reason for this kind of banking policy. However, due to a shift in the global trends pattern, an increase of the scope for Islamic banks to expand in trade finance is expected.

The Turkish AV Havalimanlari Holding announced a consortium including TAV secured $1.2 billion in Islamic financing for Medina Airport. The financing facility was secured from Arab National Bank, The National Commercial Bank and The Saudi British Bank.

Political, humanitarian and financial aid to the victims of violence in northwest Myanmar is being organized by the Organisation of Islamic Cooperation. According to Secretary-General Ekmeleddin Ihsanoglu, the dimensions of the violent conflict between ethnic Rakhine Buddhists and Muslim Rohingyas are hardly known. Therefore, the call for help including housing, food, medical help and political support must be answered.

The civil war in Syria epands to the capital, which is why banks experience some difficulties. Even though corporate lending and trade financing have almost stopped, banks still continues deposits and withdrawals. The higher inflation and weaker pound are possible to start a crisis, however, there is no immediate threat of collapse of the banking system.

The Development Bank of Kazakhstan issued the first sukuk in the former Soviet Union worth $75 million. It is expexted that this sukuk will soon be followed by a number of new issues in the country. The issued bond will generates an annual payment of 5.5 per cent and is a part of the bank's Islamic note programme worth 1.5 billion ringgit. THe programme is subjected to the sharia principle of murabaha.

Additional costs for issuing an Islamic bond no longer have to be paid - the "sukuk premium" is gone. As a senior executive at Deutsche Bank explained, this will result in a hige increase in sukuk issuance. At the same time, tenors will become longer. Until last year, the reasons of common premium payment were that issuers catered to a smaller investor base. Also, in comparison with conventional bonds, investors were little familiar with sukuk structurs. This is now not the case any more since a heavy investor demand for sukuk this year can be observed.

Islamic exchange-traded funds (ETFs) are having serious difficulty attracting new investment while Western investors, on the other hand, move into conventional ETFs. This contrast is said to be caused by the Gulf's investment culture and the principles choice of financial products by institutions. Despite expected growth in Islamic ETFs due to higher interest in financial products like sukuk, amounts of fresh money committed to Islamic ETFs have hardly risen or have even stopped.

The Freedom and Justice Party has announced it financial development plans which will include waqf. Thus, multiple small subscriptions to a sukuk will make their contribution in form of cash or other assets instead of a single wealthy donor. However, the efficiency of waqf management in Egypt is largely criticized.

Australian fund manager Crescent Wealth intends the launch of the country’s first Islamic pension fund by December. According to its managing director, between 15 to 30 percent of it shall be allocated in property. The goal is to build the fund to between A$4 billion ($4.03 billion) and A$6 billion in five years. This accomplishment should be possible due to lack of available Shariah-compliant financial products in Australia.

Afghanistan's central bank expects an Islamic banking law to be enacted by September, drawing billions in deposits from citizens wary of the conventional banking system.
The central bank's sharia board will meet Sunday to finalize the law.
Of 17 banks in Afghanistan, six have Islamic banking windows. The central bank hopes to approve the creation of fully fledged Islamic banks after the law is passed.