IslamicFinance.de

Pakistan has received $1 billion payment for its recent sukuk sale, a spokesman for the State Bank of Pakistan (SBP) has said. The government issued sukuk on Nov 27 to raise its foreign exchange reserves in line with International Monetary Fund’s demands. The government had initially planned to float $500 million worth of the Islamic bonds. But in the wake of high demand, which rose to $2.3bn, it decided to raise $1bn. The five-year sukuk were sold at a profit rate of 6.75 per cent. The country’s total liquid foreign exchange reserves declined to $12.993bn during the week ending November 28 compared to $13.219bn the previous week.

Last week, an immunisation programme secured a $500 million (£319.4 million) issuance of sukuk, in the largest debut issue ever by a global non-profit organisation. The sukuk from the International Finance Facility for Immunisation Co (IFFIm), for which the World Bank acts as treasury manager, is part of a broader trend to use bond markets to fund development and humanitarian projects. IFFIm, backed by nine sovereign donors including Britain and France, will use the proceeds of its sukuk to finance projects for the Global Alliance for Vaccines and Immunisation (GAVI). The sukuk could encourage other non-profits to consider this funding tool.

The Islamic Development Bank has presented Kyrgyzstan 5 mobile clinics, the Department of Information Policy of the President reported. Last Wednesday, President Almazbek Atambayev and IDB President Akkhmad Mohamed Ali Al Madani discussed the implementation of new projects in Kyrgyzstan. The IDB Director said that he will send a special mission to explore new joint strategic projects in the near future. Moreover, an agreement on donating Kyrgyzstan five mobile clinics designed to improve access to health services in remote areas of the country was signed during the meeting. Equipment cost is estimated at $10 million.

The United Kingdom, Hong Kong and Luxembourg issued sukuk for the first time in 2014. They gave a huge boost to a market which was once just seen as a funding tool for borrowers from the Gulf and Muslim countries in southeast Asia. Senegal and South Africa also debuted on sukuk markets, lifting the total number of sovereign issuers to 19 so far. But top-notch entities such as Luxembourg and Britain are unlikely to be sukuk regulars. Momentum next year could instead come from emerging economies. Debut issuer South Africa raised $500 million in September. Oman, Kazakhstan, Tunisia, Bangladesh, Jordan, the Philippines and Kenya are also mulling sukuk.

Bahrain's central bank is setting up a central sharia board to help oversee Islamic finance products in the kingdom and will introduce new rules to strengthen governance in the sector, central bank governor Rasheed al-Maraj said. Traditionally, Islamic banks have practiced self regulation to ensure the sharia-compliance of their products, but a centralised model is increasingly being favoured across the global industry. The central bank will introduce new sharia governance rules to expand the internal sharia review and audit functions, while making it mandatory for banks to have an independent external sharia audit.

The Thomson Reuters Sukuk Perceptions and Forecast 2015 survey of 44 lead arrangers and 106 investors reveals most expect a boost in Sukuk issuance in 2015 of between $150 billion and $174.9 billion. Total global outstanding Sukuk issuance stands at $241 billion, with around $110 billion Sukuk issued in 2014. Global outstanding Sukuk issuance is expected to grow to $907 billion by 2020. The recovery from last year’s low has been driven by more jurisdictions issuing Sukuk. Financial institutions continue to dominate all corporate issuances. Supply growth into 2015 will be driven by financing needs for infrastructure projects especially in the GCC and the wider Middle East region.

Jaiz Bank Plc has introduced some specific small and medium enterprise (SME) products to empower small-scale businesses and teeming customers in the grassroots. Unveiling its corporate products and services at the on-going 35th Kano International Trade Fair at the weekend, Jaiz Branch Manager, Mallam Mansur Imam pointed out that besides its conventional products like savings account (Mudaraba), lease and acquisition finance (Ijara-Wa-Iqtina) and corporate and trade financing (Murabaha), the SME was uniquely conceived to finance market driven products and encourage growth of local enterprise.

Takaful is set to grow in Turkey, with its predominantly Muslim population showing increasing interest in Islamic finance products and the government keen to support their growth. However, insurance of any kind can be a hard sell in Turkey, with the population generally averse to insurance cover and penetration levels as low as 1.4%. Takaful also has a minimal profile in the Turkish market at present. The two firms that offer Islamic insurance products, Neova Sigorta and Asya Emeklilik, account for less than 0.5% of the insurance sector’s assets. However, the increasing success of Islamic banks could point to a market opening for takaful underwriters.

The CEO of the International Islamic Trade Finance Corporation (ITFC), Dr. Waleed al-Wohaib, stated that the ITFC - an autonomous entity of the IDB - is planning to increase its annual trade financing volume in Turkey by $700 million within the next three years. The ITFC has been working with numerous banks in Turkey since its official opening in 2008 with current ITFC products trading in favor of Turkish corporations and bank amounting to approximately $1.65 billion. Meanwhile, Dubai-based Noor Bank is also reportedly eyeing off the Turkish finance market in an effort to escape the competitive banking climate of the emirates, CEO Hussain al-Qemzi said last week.

The National Bank of Kazakhstan, the central bank and financial services regulator, has taken up membership in Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The signing ceremony to commemorate the membership was held on December 2 at WIBC 2014. The agreement was signed by National Bank of Kazakhstan deputy governor Nurlan Kussainov and AAOIFI secretary-general Dr Hamed Hassan Merah. Dr Merah said the membership would allow AAOIFI to work more closely with the National Bank of Kazakhstan and the finance industry in the country to support continuing development of Islamic finance.

Bahrain-based Ibdar Bank successfully concludes the structuring of a 12-year agreement expiring in 2026 for acquiring four brand new Bombardier Q400 Next Gen aircrafts and leasing them to the Ethiopian Airlines. The agreement that was structured under a joint venture with Dubai-based operating lessor Palma Holding, includes options for an additional four Q400 NextGen aircraft, which Ibdar Bank intends to exercise in the near future. Valued at USD 100 million, Ibdar Bank contributed as investor with USD 22 million, while an amount of USD 78 million was secured through a funding agreement with Canada’s Export Credit Agency “EDC”.

Kenya will issue its debut sukuk in the next financial year, not this one as some had expected, after it opted to borrow an additional $750 million from its maiden $2 billion Eurobond issued in June. Parliament is set to consider a recommendation by its finance committee to double the government’s external debt ceiling to $28 billion to fund the construction of a newrailway, port, roads and power plants. Henry Rotich, the cabinet secretary for the Treasury, said the re-opening of the Eurobond, which is expected to be completed on Wednesday, had given the government time to prepare the documentation for the sukuk issue. He said it would be issued in the finiancial year in the financial year ending June 2016.

The Bahrain-based International Islamic Financial Market (IIFM) will develop contract templates for sharia-compliant corporate finance and trade finance transactions, as the industry body expands its mandate. IIFM is aiming to double the number of its standards by as early as next year. The new standards would help broaden the scope of IIFM, as the body works to harmonise industry practices, said Khalid Hamad, executive director of banking supervision at Bahrain's central bank and IIFM chairman. Trade finance has remained a marginal business for Islamic banks even as other areas have boomed in recent years, partly because of a lack of scale and expertise compared to larger and more established Western banks.

Islamic banking is growing faster than its conventional counterpart but is focused in a few core markets and risks missing an opportunity to build a global footprint, the EY consultancy said in a report. Islamic banks across six core markets of Qatar, Indonesia, Saudi Arabia, Malaysia, the United Arab Emirates and Turkey held $625 billion at the end of 2013 or 80 percent of the global Islamic finance market, the report said. Beyond these markets, the industry is expected to make some gains in Egypt, Pakistan and North African countries such as Tunisia, Algeria and Morocco. However, in the absence of regulatory reforms and strong sovereign support, the pace of growth is likely to be moderate.

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.

The International Islamic Financial Market (IIFM) released its IIFM Sukuk Report (4th Edition) at the IIFM Seminar held on the pre-conference day of the 21st World Islamic Banking Conference. The research report consists of a comprehensive study of the global Sukuk market and sheds light on the growth, trends and development of international and domestic Sukuk issuances for the period January 2001 - July 2014. The report contains selected Sukuk case studies in the international Sukuk market providing deeper understanding of the mechanism and uniqueness of some of the structures. It is freely downloadable from www.iifm.net

The Adam Smith Business School will host an international conference, themed “The Role and Contribution of Islamic Accounting, Finance, Economics, and Management in Contemporary society” at the University of Glasgow, UK, on 7-9 April 2015. This two-day conference will provide opportunities for participants to present their current research on the Islamic perspective of accounting, finance, economics & management as well as to build their collaboration network with other delegates. The deadline for abstract submission is 31st December 2014. For more information about the conference, please check the website: http://www.gla.ac.uk/schools/business/newsandevents/headline_351155_en.html

Global law firm White & Case LLP has advised Abu Dhabi Islamic Bank (ADIB), as sole bookrunner and initial mandated lead arranger, and a group of other lenders on a US$420 million Islamic financing provided to Zakher Marine International Inc. The financing, which was two times oversubscribed, also included Abu Dhabi Commercial Bank, Al-Hilal Bank, MashreqBank, Ajman Bank, Arab Bank, National Bank of Fujairah and Noor Bank. The facility arranged by ADIB will fund Zakher Marine's new shipbuilding programme that includes 15 vessels and three self-elevating accommodation barges.

European Islamic Investment Bank PLC Friday said it has cancelled its tender offer for up to GBP20 million as it is still in talks with regulators and is yet to receive their full approval, though it intends to launch a new tender offer with the same terms as soon as permission is received. As a result, acceptances of the tender offer are no longer valid and do not bind shareholders; shareholders who have already accepted the tender offer are now free to trade their shares if they so wish. European Islamic Investment Bank said it is confident of being in a position to complete a new tender offer before its next annual general meeting, when the authority it has to undertake the tender offer expires.

Bank Asya’s problems – withdrawal of deposits by individual and corporate investors, the wiping out of profits, the dramatic fall in share price – have apparently nothing to do with the way the bank is run. They have everything to do with a politically-motivated vendetta against the bank by Turkey’s president, Recep Tayyip Erdogan. A year on, Bank Asya continues to operate under the leadership of a former senior member of Turkey’s respected banking supervisor, the BDDK, which has tried to remain impartial to Erdogan’s machinations. But the battle for Bank Asya remains a cloud over the Turkish banking sector. Banks that do business in Turkey should tread with caution.