IslamicFinance.de

Sri Lanka could issue Sukuk and take the lead in becoming a regional centre for Islamic financial services. Bar Association President Shibly Aziz said this can open Sri Lanka to a new niche of investors, rather than the conventional ones. Sri Lanka already has more than twenty years experience in Islamic finance with an approved Islamic bank in operations.

Ezdan Holding Group has priced its inaugural Sukuk transaction in the debt capital markets with a $500m 5-year Sukuk issue. The transaction attracted an order-book up to $837m, with 71 investors participating. Investors from the Middle East took 68% of the issuance, with European investors subscribing for 21% and Asian investors taking 11%. Group CEO Ali Mohammed Al Obaidli said the investors’ strong interest resulted in the order book reaching to $837 mn, around 1.67 times of the offer amount.

Indonesia has become one of the leading sukuk issuers in the world, with issuance totaling Rp 503 trillion (US$38 bn) since its debut in 2008. Finance Minister Bambang Brodjonegoro said total outstanding sukuk was at Rp 380 trillion ($29 bn), which accounts for 15% of total government securities. He added that the latest dollar sukuk, issued in March, received a very good response from investors. For the $2.5 bn issuance, total subscription reached $8.6 bn or around 3.5 times.

A venture capital fund based on Islamic finance principles will be initiated by the end of May. It is the result of a joint initiative of the Islamic Development Bank (IDB) and Malaysia’s state-owned investment firm Malaysia Venture Capital Management. According to Treasury secretary Irwan Serigar Abdullah the initial fund size would be $100mn and could be bulked up later. In the first stages, the venture capital fund would be utilised to finance startup companies in Malaysia and the entire Southeast Asia region and could later be extended to finance entrepreneurial initiatives in other Islamic countries.

Guyana officially became the 57th member of the Islamic Development Bank (IDB) during the opening ceremony of the bank’s annual meeting in Jakarta. According to the finance ministry press release, this membership allows Guyana access to concessionary resources, grants and interest free loans. Finance minister of Guyana, Winston Jordan, is making his debut appearance in Jakarta personally to witness Guyana’s initiation into the group. Suriname, which is also a member of the Islamic Bank, is represented by its Finance Minister Gilmore Hoefdraad and Deputy Governor, Dr Anwar Lall Mohamed. The private sector is expanding economic ties between Indonesia and Suriname and, with the support of the Islamic Bank, rhetoric is becoming reality.

The volume of Islamic Development Bank (IDB)'s investments in Egypt currently amounts to US$3.7 billion. The statement was made by Nazih Al-Nasser, director of asset management and advisory activities of the Islamic Corporation for the Development of the Private Sector (ICD). He made his remarks in Cairo on Tuesday during a conference organised by the Egyptian Banking Institute, designated to focus on the role of the small and medium-sized enterprises (SMEs).

The Islamic Development Bank (IDB) Group and the World Bank Group have jointly produced a global report on Islamic finance. The full report, titled 'Islamic Finance: A Catalyst for Shared Prosperity?', will be launched during the World Bank/IMF Annual Meeting later this year. Some of the key recommendations include having adequate policy interventions and financial infrastructure to enable Islamic finance serve as a catalyst for poverty alleviation and inclusive prosperity.

ADNOC Distribution and Abu Dhabi Ports signed a Mustaha agreement. The new agreement aims to strengthen ADNOC Distribution's capacity to develop new projects at Khalifa Industrial Zone (Kizad) and provide logistical support. The agreement was signed by Saeed Mubarak Al Rashidi, CEO of ADNOC Distribution and Mana Mohammed Saeed Al Mulla, CEO of Kizad. ADNOC Distribution will set up a lubes and grease plant, as well as strategic storage warehouses. The company will commence its operations in the new location by the beginning of 2022.

The issue of sustainable development goals (SDGs) was discussed intensely at the annual meeting of the Islamic Development Bank (IDB) in Jakarta. Finance Minister Bambang Brodjonegoro said many aspects of the SDGs were covered by Islamic finance, arguing that most customers served by Islamic micro-finance were poor people who were not in the banking system. Bank Indonesia Governor Agus Martowardojo added the size of Islamic finance is still very small, representing only 1% of total global finance.

Brunei's efforts to expand the scope of the financial sector are aimed at ensuring a greater diversity of public and private sector financing. In April Brunei Darussalam issued two sukuk worth a combined $150m. The first, a $50m bond with a rental rate of 1.03%, has a one-year maturity, while the second offering, a $100m sukuk with a rental rate of 0.78%, will mature in July. In the period from 2001 to 2015 Brunei Darussalam offered 119 short-term sukuk, equivalent to 2.32% of the global market by value. The Sultanate stands alongside Indonesia and Malaysia as major issuers of Islamic financial instruments in the region and is poised to play a growing role in the issuance of sukuk in coming years.

The Thomson Reuters Global Sukuk Index was last at 119.83102 points, up from 116.97354 at the end of last year. The Thomson Reuters Investment Grade Sukuk Index is at 118.12115 points against 115.21206 at end-2015. The Islamic Corporation for the Development of the Private Sector, which completed a debut sale of US$300 mn of five-year sukuk this year as well as two private placements, plans a further transaction in coming months.

The government of Bahrain has privately placed a $435 mn, three-year sukuk issue in a deal arranged by Noor Bank, Bank ABC and Kuwait Finance House. The deal was priced in the area of 325 basis points over midswaps. Strained by low oil prices, Bahrain borrowed in February $600 mn in a two-tranche reopening of a previous US dollar bond issue. On Saturday Moody's Investors Service cut its rating of Bahrain's sovereign debt by one notch to Ba2, taking the rating deeper into junk territory, with a negative outlook.

Sharia student loans will be set up for the first time in Britain as part of a drive to boost the number of young Muslims applying to university. The government vowed to tackle the issue by creating a Takaful model, which is Sharia-compliant. Although no interest would be charged, the government said that repayments would be structured so that the total paid back would be the same as that paid by a student with a regular loan.

Guidance Capital Markets announced it closed a three year Sukuk issuance for the Saudi Arabian conglomerate Al Bayan. The USD denominated Sukuk was issued last week through a private placement with three GCC banks, and was led by Guidance, who also acted as financial advisor to Al Bayan. The issuance is one of the first transactions of its kind, where a private conglomerate in KSA closed a USD dollar Sukuk through a private placement.

Gulf borrowers are back in the bond market, and a new pattern is emerging. GCC bond sales climbed 32% to a total $15.9 bn this year, according to data compiled by Bloomberg. Dubai’s government sold a $569 million privately-placed sukuk in March and Emirates NBD raised $499 mn from such deals. Bahrain and Oman have also opted to privately place sovereign issues. Rizwan Kanji, consultant at King & Spalding said most private-placement issuances are underwritten by the arrangers, which provides the issuer with certainty of execution and pricing.

Suriname's Trust Bank plans to complete a conversion of its operations to Islamic banking by the end of this year, becoming the first full-fledged Islamic bank in South America. CEO Maureen Badjoeri said the bank aims to expand financing to small businesses and build stronger commercial links with Muslim countries. The advisor of the coversion is the Islamic Corporation for the Development of the Private Sector (ICD), which may also take a strategic stake in the bank after the transition is completed.

The Ugandan government reviewed the Financial Institutions Act 2004, that allowed the introduction of both Islamic and Agency banking. However, Islamic finance agitators still believe that without the revision of the Central Bank Act, the Hire Purchase Act, The Stamp Duty Act and the Accounting Principles Act, it will be difficult for Islamic finance to deepen in Uganda. Sulaiman Lujja from the Islamic University in Uganda says Central Banks have to develop, adopt and adapt various policies and prudential guidelines.

Bank Al Jazira will meet local fixed income investors this week for a sukuk sale which will improve its Tier 2. The transaction will likely run for ten years but includes an option to redeem the sukuk after five years. It is being arranged by GIB Capital, as well as the bank's own investment banking arm. Bank Al Bilad has chosen HSBC's Saudi Arabian arm to arrange its own Tier 2-enhancing sukuk issue. According to their respective financial statements, Bank Al Jazira's CAR was 15.83% at the end of 2015. At the same point, Bank Al Bilad's CAR was 15.88%.

Emirates Islamic Bank has mandated banks including HSBC for the sale of Islamic bonds. The sale of the dollar-denominated, benchmark-sized securities may begin this week and the sale is arranged by Standard Chartered, Emirates NBD, Dubai Islamic Bank, Noor Bank and Bank ABC. Emirates Islamic Bank last sold bonds in July 2012, when it raised $500 mn from securities with maturity of between five and six years.

Dubai’s Noor Bank has picked seven banks to arrange investor meetings ahead of a potential Tier 1 dollar-denominated sukuk issue. Joint global coordinators include: Citi, Standard Chartered, Dubai Islamic Bank, Emirates NBD Capital, First Gulf Bank, Noor Bank and Sharjah Islamic Bank. Dubai’s government owns 48% of Noor Bank, which starts to hold meetings with fixed income investors in the Middle East, Asia and Europe.