IslamicFinance.de

The National Treasury invited on 6th December banking institutions to submit proposals for the provision
of advisory services for the structuring and issuance of a government Islamic bond (“Sukuk”) in
the local and international markets.
The invitation is in line with the National Treasury’s intention to diversify its funding and
investor base.
“There is a great interest in the SUKUK market and this is the first step towards meeting the
growing appetite for government backed Shariah compliant investments” said Lungisa Fuzile,
Director General of the National Treasury.
Interested service providers are expected to submit proposals by close of business (RSA time)
on or before 21st December 2011. Shortlisted bidders will be informed by 20th January 2012.
ENDS

Further Information:

Request for Proposal (RFP):
http://www.treasury.gov.za/comm_media/press/2011/RFP%20-%20TOR%20Islamic...

Annexure to RFP:
http://www.treasury.gov.za/comm_media/press/2011/Annexure%20A%20-%20Suku...

The effects of the ‘Arab Spring’ in North Africa may have presented fantastic opportunities for Islamic finance according to Patrick AbiHabib of Arab Banking Corporation.
He explained that the transitional authorities in Libya, Tunisia and Egypt have expressed their support for the Islamic banking sector, and Libya had set about changing the country’s financial regulation to give permission to the new government to raise money from the Islamic capital markets, taking the country’s Islamic banking regulations to the next level.

One of the WSJ’s blogs (Deal Journal Australia) for November 20 called Islamic finance in Australia a ‘mirage’ on the basis that the Big Four banks are not presenting retail Islamic finance products to the Australian Muslim population (estimated to be around 350,000 people).
The article doesn't present the main point , which is that Australia has a vast amount to offer the world in terms of a wide palette of investment banking activities – fund management, Sukuk issuance, and Shari’ah compliant PPPs.

It seems that although the planned introduction of Sukuk in Kenya is foreseen to expand the opportunities available in the capital market, fund managers stated that its impact will not be significant unless the Sukuk represent tangible assets to allow trading, or are deliberately structured to have a short maturity if they represent receivables of cash.
In Kenya, fund managers are used to trading bonds with commercial banks and will be searching for similar opportunities from Sukuk issues.

The Islamic Corporation for the Development of the Private Sector has appointed Malaysia’s INCEIF to deliver its Chartered Islamic Finance Professional course for the ICD’s two-year Islamic finance talent development program.
The program will begin in January 2012 in Jeddah. ICD received more than 300 applications for the new program, which has the purpose to take in up to 24 participants in the future. Al-Aboodi, ICD's CEO, hopes that graduates will eventually work in Islamic finance jurisdictions where talent is lacking.

The International Islamic Liquidity Management Corporation will launch its first short-term papers in the next six months.
The initial issuance will be relatively small and will be used to test the market and the workings of the system. Subsequent high-quality instruments in major currencies within the $2bn to $3bn range will be regularly issued throughout the year.
The identities of the interested parties were not revealed.

Fitch Ratings has just confirmed the IDB’s Long-term Issuer Default Rating at ‘AAA’ with a Stable Outlook and Short-term IDR at ‘F1+’. Mostly the excellent rating shows the risk level of the Shari’ah compliant work that IDB does and its lack of exposure to collapsing asset classes around the world.
IDB’s capital is owned by 56 countries, which are all members of the Organisation of the Islamic Conference. The main shareholder is Saudi Arabia (‘AA-’/Stable), which owns 24.6% of callable capital.

Norton Rose has assists its reputation in the Islamic finance field after advising Indonesia on a $1 billion sukuk issuance, as the country attempts to raise its burgeoning currency reserves and targets the fastest economic growth since the Asian financial crisis of 1998.
The issuance, closed on Nov. 21, was build as a sukuk al ijara (sale and lease back) and has a maturity of seven years, with periodic distributions of four per cent per annum.

Fitch Ratings launched its new Islamic portal service. The ratings agency developed the new service developed to showcase Fitch's Islamic rating coverage and research content on a dedicated section of the global website. It couples ratings and research on both Islamic issuers and Islamic issuances in one place. Users accessing the Islamic finance pages can get a global view on the Islamic finance rating coverage by Fitch.
Although a demand has not yet been identified, if subscribers show interest the Islamic portal could be sold as a separate product in the future.

According to Ernst & Young's inaugural World Islamic Banking Competitiveness Report 2011, Islamic banking's market share of all banking assets in Gulf extanded over the 25 per cent threshold in 2011.
The report forseen that Mena Islamic banking assets with commercial banks will more than double to $990 billion by 2015 as Islamic banks compete for mainstream customers who are open to Islamic or conventional banking.

Standard & Poor's Ratings Services has assigned a 'BB' issue rating on proposed Sukuk certificates to be launched by Bereket Varlik Kiralama Anonim Sirketi (the issuer), a special purpose company (SPC).
The rating on the proposed certificates mainly shows Albaraka Turk's irrevocable undertaking to obtain the assets held by the issuer at the redemption date of the Sukuk at the exercise price which will be equal to the aggregate face value of certificates outstanding.
Albaraka Turk has implied that it is using this sukuk to raise funds for general purposes in accordance with Shari’ah principles.

It is expected that Islamic finance assets around the world will climb 33 percent from their 2010 levels to 1.1 trillion US dollars by the end of 2012, boosted by the aftermath of the Arab Spring uprisings and dissatisfaction with conventional finance in the wake of the global debt crisis. The statement came from consultants from Ernst & Young.
Growth in the Middle East and North Africa will be particularly strong, with assets rising to a forseen $990 billion by 2015 from $416 billion in 2010, as new countries open up to Islamic finance.

Islamic banks operating in the UAE have objected to new lending rules enforced by the Central Bank early this year and requested amendments for their own business, motivating that some of the new rules violate Shariah banking.
The new lending law presented by the central bank for the country's 23 national banks and 28 foreign units capped personal loans at 20 times a borrower's monthly salary and stipulated the loan must be repaid within 48 months.

Boubyan Takaful Insurance Company signed a consulting services agreement with Protiviti for Risk Management aimed at supporting the Company's development.
Protiviti will determine the areas of focus and expand them with the management of Boubyan Takaful Insurance to include them within the services of the company, which will make sure that it is working according to the highest standards. The company will also designate a clear risk management, assessment and control strategy and launch an awareness campaign about risk for all its staff members.

It appears that RB-Hicom Bhd is planning to sell RM500mil of Islamic bonds to fund working capital and refinance debts.
The sukuk which pay returns from assets that comply with the religion’s ban on interest, was included in an existing RM1.8bil medium-term programme.

It is possible that Legal & General Gulf Takaful will set up business operations in Malaysia at some point to meet the growing demand for takaful products. The statement came from managing director, Manfred Maske.
Land & General Gulf Takaful is a joint venture insurance company formed in 2009 between Legal & General Group and Ahli United Bank.

Fitch Ratings states that the inaugural Standards for Gulf Debt Issuers published by The Gulf Bond and Sukuk Association represents a positive step towards increasing transparency and public disclosure to give investors a better understanding of risks and symmetric access to consistent information.
Inspite of this, their effectiveness will depend on greater clarity about the details of the announced initiative, as well as its full and timely implementation.

According to British Ambassador Iain Lindsay, UK and London will remain the world's leading international and Islamic financial centres. He stated that Islamic finance benefits from the UK's combination of experience, variety of skills, geographic location, infrastructure, transparency and openness.
He added that UK is in ninth place globally and is the leading Western country. The country is also seeking to consolidate its position as the gateway to Islamic finance in Western Europe.

A group of Islamic banks and financial industry associations launched the industry's first international Islamic interbank rate, presenting a Sharia-compliant alternative to traditional interest-based benchmarks.
The Islamic Interbank Benchmark Rate (IIBR) is the average expected return on Sharia-compliant, short-term interbank funding.
IIBR addresses a source of tension within the Islamic finance industry, which is evaluated to have reached $1 trillion in assets: Islam forbids the use of interest in any transaction, but the industry has long used the London Interbank Offered Rate (LIBOR), a system of interest rates, as a benchmark in the absence of Sharia-compliant alternatives.

Mahathir Mohamad, former Malaysian prime minister, has alerted the Islamic banking industry that it has to learn about the mistakes of conventional finance if Islamic finance is to avoid the same fate.
He suggested that more resort to Islamic banking systems and principles are necessary in order to prevent greed and abuses from taking over.
Mahathir anticipated that Islamic banking and the wealth of the Muslims will cause the rest of the world to link up with Muslim countries.