IslamicFinance.de

The Islamic International Rating Agency (IIRA) has reaffirmed the ratings of Bahrain-based ABC Islamic Bank at A+/A-1 on the national scale (long-term and short-term respectively), and A-/A-2 on the international scale with a 'Stable' outlook. The ratings agency said the overall fiduciary score of the bank has been assessed to be in the range of '76'“80' and indicates a well developed governance structure and strong fiduciary capacity, wherein rights of various stakeholders are well-protected. As the bank's business prospects continue to improve, enhancement in earnings is likely to be sustainable, the IIRA said. The bank's balance sheet has remained strong, sustained by sound capitalisation related indicators, it added.

Do?an Cans?zlar, former head of the Capital Markets Board (SPK), has warned, in light of claims that a number of Turkish banks are in difficulty, that a smear campaign orchestrated by President Recep Tayyip Erdo?an against Bank Asya could lead to a worse financial crisis than the one Turkey suffered back in 2001. At the beginning of the week, Erdo?an publicly threatened independent regulatory body, the Banking Regulation and Supervision Agency (BDDK), over its lack of action against Bank Asya, saying the agency must take a decision on the bank and follow through on it. The banking industry may be in worse shape than many think. On Tuesday Twitter user @fuatavni revealed the names of eight banks that he maintains are in financial difficulties.

The Islamic Corporation for the Development of the Private Sector ( ICD ) and Perbadanan Tabung Amanah Islam Brunei (Perbadanan TAIB), signed a memorandum of understanding to explore the launch of a Shariah- compliant leasing/Ijarah business in Brunei Darussalam. The Partnership plans a number of other COLLABORATIONS with the support of the Ijarah Management Company (IMC). Established in November 2011, IMC has successfully managed to set up and operate more than eight leasing companies globally including CIS, MENA and West Africa countries.

Islamic financial institutions (FIs) drove the Malaysian bond and sukuk markets in 1H 2014. With AmIslamic Bank paving the way with the issuance of the world's first Basel III-compliant Tier-2 Sukuk Murabahah in February, a host of RAM-rated Malaysian Islamic FIs - such as Maybank Islamic, Public Islamic Bank and Hong Leong Islamic Bank - have been tapping the domestic sukuk market for very competitively priced funding. Driven by this, the Malaysian bond market remained focused on Islamic finance in 1H 2014, with a strong showing in sukuk issuance- representing 73% of the overall corporate bond market in the same period - grossing RM42.2 billion of new issues.

Turkish participation bank Kuveyt Turk plans to issue sukuk in Malaysia aiming to raise as much as 2 billion ringgit ($625.3 million), its first foray into the Southeast Asian Islamic debt capital market. Kuveyt Turk, 62 percent owned by Kuwait Finance House , will sell the sukuk to qualified investors through its asset-leasing company, KT Kira Sertifikalari Varlik Kiralama. No timeframe was given for the deal. In July, Turkiye Finans became the first Turkish lender to issue ringgit-denominated sukuk in Malaysia when it raised 800 million ringgit ($252.2 million) from a 3 billion ringgit programme it set up in June. Moreover, in June, Bank of Tokyo-Mitsubishi UFJ set up a $500 million multi-currency sukuk programme in Malaysia.

Middle Eastern banks bought the vast majority of a debut $500 million sukuk issue by Goldman Sachs, a positive sign for other conventional banks hoping to tap the region’s liquidity by issuing Islamic debt. Goldman priced its five-year sukuk on Tuesday at a profit rate of 2.844 per cent, drawing about $1.5 billion of investor orders, after roadshows in Qatar and the United Arab Emirates. Middle East investors bought 87 per cent of the Goldman sukuk, while 11 per cent went to Europe and two per cent to Asian investors. Banks bought 77 per cent of the bonds, asset managers bought 22 per cent and private banks bought one per cent. Meanwhile, France’s Societe Generale and Japan’s Bank of Tokyo-Mitsubishi UFJ set up sukuk programmes in Malaysia, but have not issued yet.

Indonesia's financial services authority, Otoritas Jasa Keuangan (OJK) is preparing a five-year blueprint aimed at industry issues such as sector consolidation, a lack of scale and foreign ownership limits. OJK said it was now preparing draft regulations for Islamic pension funds, after Indonesia's national sharia council issued a ruling approving the overall concept in November last year. Under a "moderate" scenario, the OJK projects Islamic banking assets will grow by 14.4 percent in 2014, down from 24.2 percent in 2013 and 34 percent in 2012, although these figures would remain above those for conventional banks. The OJK said challenges faced by Islamic banks were mainly internal, rather than related to external pressures such as falling commodity prices or lower export demand.

A feud between Turkish President Recep Tayyip Erdogan and U.S.-based Islamic cleric Fethullah Gulen has made sukuk from Asya Katilim Bankasi AS (ASYAB) the worst-performing in the world. Debt from the Shariah-compliant lender known as Bank Asya has lost 29 percent this year, compared with an average 4.5 percent return for dollar-denominated sukuk globally. The government must be clear about what the “problem” with Bank Asya is and decide whether it will take over the lender or impose restrictions on it. The bank, whose shares resumed trading on Turkey’s bourse on Sept. 15 following the five-week long suspension, is planning to raise funds in a capital increase, it said yesterday. The stock slumped 42 percent this week to a record low of 72 kurus at 12:24 p.m. in Istanbul.

New rules issued by the United Arab Emirates' securities market regulator aim to develop local currency bond and sukuk markets in the Arab world's second biggest economy. In meetings with potential issuers and financial firms in Abu Dhabi and Dubai this week, the Securities and Commodities Authority (SCA) outlined rules designed to make it faster and cheaper for companies to issue conventional and Islamic bonds, and easier for investors to trade them. If successful, the project could help to reshape corporate financing in the UAE. At present, firms rely heavily on bank loans and to a lesser extent retained earnings; local currency bond issuance is minimal, and usually only the biggest companies can afford to issue bonds in the international market.

About four-fifths of Middle-Eastern businesses are seeking external finance, while three in five have previously offered equity in their business to external investors, according to a new KPMG International survey. The survey found that in Qatar, banks are willing to lend to family businesses; however, the report identifies that High Net Worth Individuals (HNWIs) are an untapped resource in the region. Survey results show that the top priorities of HNWIs and Family Owned Businesses align. However, it seems the biggest challenge to family businesses in the Middle East is the thorny issue of management interference. All Middle East respondents felt that HNWIs would get heavily involved in management decisions.

Emirates Islamic has launched of a five year Wakala investment option, with an expected profit rate of 2.5 per cent per annum. Launched with the objective of encouraging customers to focus on long term savings, Emirates Islamic’s five year Wakala investment option is available on amounts starting from AED100,000 up to AED25 million. By offering an annual profit rate similar to what is to be paid for Zakat, Emirates Islamic is enabling Muslim customers to use their funds wisely to meet their Zakat obligations. Meanwhile all customers can benefit from the attractive profit rates. The five year Wakala requires customers to ensure that the amount invested remains locked-in for a period of five years, as early liquidation would mean loss of profit.

Three years after its first foray into the Islamic capital markets ended without a sale, investors piled in to buy sukuk debt from Goldman Sachs Group Inc. (GS:US) yesterday. The New York-based lender attracted bids for three times the $500 million of sukuk it sold. The five-year sukuk was priced to yield 90 basis points, or 0.9 percentage point, over the benchmark midswap rate. After failing to sell sukuk bonds in 2011 amid criticism the deal didn’t ensure debt would be traded at par, as required by Islamic law, Goldman adjusted the structure this time in a bid to appeal to more investors. The new issue is a Sukuk al Wakala. Standard & Poor’s rated the issue A-, the seventh-highest investment grade.

Industry players are upbeat about Islamic Exchange-Traded Funds (ETFs) but say a lot needs to be done to raise awareness and excitement about the investment fund. Generally, however, Malaysia has not been enjoying much success when it comes to ETFs since the first product was listed on the local bourse in 2005. Global ETF experts were in unison in pinpointing limited investor awareness as the culprit for the fund’s lack of success. The Malaysian ETF market stands at RM1.03 billion of assets under management (AUM) as at August 2014, versus the global figure of more than US$3 trillion (RM9.6 trillion) by year-end. On the global stage, ETFs have been growing at a phenomenal rate, estimated at some 20 per cent of compounded annual growth rate since its debut in 1989.

Azzad Asset Management has announced the release of a white paper detailing the impact of Halal investing guidelines on investment performance. Examining historical data over the last two decades, the white paper offers evidence that Shari'ah-screened indices, which favor industries like information technology and health care and exclude financial services, can outperform their broad-based conventional counterparts over the long term. The paper also shows that the most significant divergence between conventional and Shari'ah-screened indices is the almost complete lack of financials in the latter due to the Islamic prohibition on interest. Azzad's findings follow other research indicating that socially responsible investing strategies can deliver competitive risk-adjusted returns over the long run.

The Sultan of Perak, Sultan Nazrin Muizzuddin Shah, has graciously consented to be the Royal Patron for Malaysia’s Islamic Finance Initiative. On behalf of the Malaysia International Islamic Financial Centre (MIFC) executive committee, the central bank said under the patronage of Sultan Nazrin, it was envisaged that Malaysia’s Islamic finance marketplace would continue to further strengthen the goodwill and strong bilateral relationships the country has established with other nations. Sultan Nazrin obtained a B.A. in Philosophy, Politics and Economics from the University of Oxford and a Ph.D. in Political Economy and Government from Harvard University.

On 24 July, under the auspices of the Prime Minister Dr Abdullah Ensour, Jordan officially inaugurated regulations for the issuance of Sukuk. The inauguration ceremony was organized by the Jordan Securities Commission ( JSC ) and followed its conclusion of the preparation of all legislation and instructions required by the Islamic Finance Sukuk Law No. 30/2012 and legislation governing the issuance process of Sukuk for all economic activities in both the public and private sectors alike. Available structures include Ijara, Mudaraba and Musharaka. The Central Bank of Jordan (CBJ) is a regular player in the bonds market. A clear signal to local financiers and corporates would be an Islamic issuance by the CBJ, now that the legal framework is in place.

JANY Sukuk Company Limited priced a bond on Tuesday, with the Goldman Sachs Group, Inc as Guarantor. The Issue Amount is $500 million, its Maturity Date is September 23, 2019. Following are terms and conditions of the bond: Coupon 2.844 pct; Issue price Par; Spread 90 basis points; Underlying govt bond over the midswaps; Payment Date September 23, 2014. Lead Managers are Goldman Sachs International, Abu Dhabi Islamic Bank, Emirates NBD Capital, National Bank of Abu Dhabi, NCB Capital and QInvest. Fitch has assigned a rating of A, and Standard & Poor's A-.

Shares in Bank Asya plummeted by nearly 20 per cent on Tuesday, reaching a new low, after Turkey's president Recep Tayyip Erdogan urged the country's banking watchdog to “make a decision” on the beleaguered Islamic lender's future.

Egypt's Wethaq Takaful Insurance has purchased EGP 17 million worth of investment certificates to fund the new waterway along the Suez Canal, said General Manager of Financial and Administration Affairs Abd El Aziz Labib. Labib referred to the Suez Canal investment certificate as a guaranteed saving pool, at an interest rate of 12%, which is higher than those invested in the Treasury bill and bonds. Furthermore, the Egyptian official said Wethaq Takaful's portfolio of total investments reached EGP 230 million by end of last fiscal year 2013/2014. The company plans to boost its investment portfolio to EGP 250 million by end of the current fiscal year.

MARC has assigned a final rating of AIS to Bank Muamalat Malaysia's Islamic Senior Notes Programme (Senior Sukuk) of up to RM2.0 billion under the Islamic principle of Wakalah Bi Al-Istithmar with a stable outlook. Upon review of the final documentation of the Senior Sukuk, MARC is satisfied that the terms and conditions of the Senior Sukuk have not changed in any material way from the draft documents on which the earlier preliminary rating of AIS was based. The full details on the assigned rating have been provided in Bank Muamalat's preliminary rating announcement on June 24, 2014 which can be accessed at www.marc.com.my.