IslamicFinance.de

Russia hopes to learn from the experience of Azerbaijan in the field of Islamic banking, said Sergey Drobyshevsky, the scientific director of the Gaidar Institute for Economic Policy in Baku. He said the presence of IBA Moscow, a Russian subsidiary of the International Bank of Azerbaijan, must contribute to this. Drobyshevsky believes it will be easier for the Azerbaijani banks and businessmen to work in Russia than the Malaysian specialists of that sphere. Behnam Gurbanzada, the director of Islamic banking at the IBA, earlier called Russia a "promising" platform to further the development of Islamic finance.

The Government of Malaysia sold the world's first 30-year sovereign sukuk yesterday and, in the process, shrugged off domestic woes to establish a long-dated benchmark Islamic curve for other sovereigns to follow. The 30-year was part of a two-tranche offering of US$1.5bn in Islamic 144A/Reg S bonds to the international markets at a time when 1MDB's M$41.9bn debt woes threaten to derail the government's bid to rein in its fiscal and budget deficits. Malaysia stayed disciplined and kept to its initially targeted issue size of US$1.5bn split between the US$1bn 10-year note and the US$500m 30-year note. The 2025s, priced to yield 115bp over US Treasuries, rallied to 112bp/109bp and the 2045s, priced at 170bp, traded at 164bp/161bp.

Middle East buyers took up only 2% of the 30 year sovereign Sukuk issued by Malaysia (the 10 year issuance allocation consisted of 24% Middle East buyers). This low take up by Middle East can be read a few ways: 1. Sukuk primary subscribers remain hold to maturity investors, and a 30-year note was too long for Middle East buyers to commit to. 2. The drop in price of oil is hurting and Gulf investors are planning only up to a ten year horizon. 3. With the issuance being oversubscribed and attracting interest of over US$9 billion, Malaysia decided to be give Gulf investors only the shorter term ten year issuance. 3. CIMB and Standard Chartered did a great job of marketing to Asian buyers, whilst HSBC did a less stellar job in the Middle East market.

We are pleased to inform you that the July - December 2014 issue of the Malaysian ICM Bi-annual Bulletin published by the Securities Commission Malaysia (SC) is now available online at the Source link below.

The Government of Malaysia kicked off bookbuilding on its much-anticipated sukuk this morning, showing tenors of 10 and 30 years at guidance of around 135bp and 185bp over US Treasuries, respectively. The 144A/Reg S offering follows a week of roadshows that ended in New York yesterday evening. Based on guidance alone, the sovereign is providing a small pick-up, but, if demand proves robust, this is likely to be narrowed. Malaysia Sovereign Sukuk will be the issuer of the Islamic notes, and the Government of Malaysia, rated A3/A- (Moody's/ S&P), will be the obligor. Proceeds will be used for the government's general purposes, including the redemption of an existing US$1.25bn trust certificates due this year.

Geopolitical entanglements and new Cold War era tussles with the west, compounded by lower oil prices, have brought the Russian economy to its knees. Investment prospects for the Eurasian giant appear bleak, with credit ratings agencies Standard & Poor's and Moody's downgrading its economy to 'junk' status earlier this year. For support Russia is turning its attention to the Muslim populations of its various republics. Around 14 per cent of Russians follow Islam. However, the tradition of centralisation in the Russian Federation offered until now little room for the growth of Islamic finance. This, however, appears to be changing.

Two Qatari banks and Chinese brokerage Southwest Securities signed a memorandum of understanding to establish a company handling Islamic finance deals in China, Qatar's central bank governor Sheikh Abdullah bin Saud al-Thani said on Tuesday. The banks are Qatar National Bank and Qatar International Islamic Bank. No further details of the venture were immediately available.

Indonesia’s branchless banking initiative faces an uphill battle against misconceptions of financial services in the country, a survey report from consultancy firm InterMedia Indonesia revealed. Nearly half of Indonesians do not use any form of financial services, according to the firm’s Financial Inclusion Insights report. It also found that one-third of people who use informal financial services cited “an inability to afford an account” as the main reason behind their reluctance to use formal banking services. The report surveyed 6,000 people across 24 provinces in Indonesia between August and November last year.

Malaysia Building Society Bhd (MBSB) has not initiated any new merger discussions with any organisation after the deal with CIMB Group Holdings Bhd and RHB Capital Bhd fell through. President and chief executive officer Ahmad Zaini Othman reaffirmed that MBSB has not received the green light from its shareholders to talk to any financial institution on a potential merger and acquisition. Meanwhile, Ahmad Zaini signed a Memorandum of Understanding (MoU) on behalf of MBSB with Credit and Debt Management Agency (AKPK). The MoU will enable MBSB to participate in AKPK’s debt management programme, which will see the latter extending its services.

The Islamic Financial Services Board (IFSB) successfully organised a 'Seminar on Enhancing Financial Inclusion through Islamic Finance' on 31 March 2015 in Jakarta, Indonesia. This Seminar is organised in conjunction with the IFSB Annual Meetings and Side Events 2015. The one-day Seminar aimed to explore the role of Islamic finance in supporting financial inclusion, the building blocks necessary for the development and promotion of access to finance to the uncovered population and key success factors and challenges in promoting financial inclusion for greater shared prosperity, financial stability and economic growth. The Seminar was followed by the IFSB's 8th Public Lecture on Financial Policy and Stability on 1 April 2015.

Russia is trying to increase its cooperation with the UAE, especially in Islamic finance, as the country is seeking to strengthen its trade ties with the UAE and other Gulf countries, according to Igor Egorov, the Chairman of the Russian Business Council. Egorov said the country has brought in new regulations to attract Islamic financial institutions from the Middle East and Asia as demand for financing grows in Russia. He added that the trade figures between Russia and the UAE stand at $2 billion and are set to grow in the coming days. Moreover, the Eurasian Economic Union provides opportunity for UAE companies to invest.

CIMB Group Holdings Bhd. plans to sell a sukuk backed by a pool of loans, becoming the world’s first Islamic bank to sell the type of collateralised debt that contributed to the global financial crisis. The Malaysian lender is seeking to raise RM1 billion (US$275 million) from an offering of five-year notes this quarter, CIMB Islamic Bank Bhd.’s Chief Executive Officer Badlisyah Abdul Ghani said. The securitized debt will diversify funding options in the Islamic finance industry. CIMB Islamic’s new notes will be sold via private placement to investors who are comfortable with this type of security, CEO Badlisyah added.

The world’s first Islamic Asean Exchange Traded Fund (ETF) is enroute for listing on Bursa Malaysia on May 7. Investment management provider, i-VCAP Management Sdn Bhd (i-VCAP), today launched the prospectus for the Shariah-compliant ETF, which will be known as MyETF MSCI SEA Islamic Dividend (MyETF-MSEAD). Chief executive officer Mahdzir Othman explained that MyETF-MSEAD was an open-ended fund with an approved fund size of 500 million units. Investors can subscribe to the fund until April 22, at RM1 per unit with a minimum subscription size of 100 units.

A Taliworks Corporation Bhd joint venture has received the Securities Commission’s approval for the proposed issuance of the RM210mil Sukuk Murabahah. Taliworks said the Sukuk would be issued by Grand Sepadu (NK) Sdn Bhd, a joint venture in which it has a 75%. The proceeds from the issuance of the Sukuk Murabahah will be utilised to facilitate the roll-over of the short term syndicated bridging loan facility of up to RM200mil undertaken by GSNK into the Sukuk Murabahah and for working capital purposes. Taliworks said Hong Leong Investment Bank Bhd is the principal adviser and lead arranger for the Sukuk Murabahah.

Standard & Poor's Ratings Services has assigned its preliminary 'A-' issue rating to the proposed US dollar-denominated Sukuk trust certificates to be issued by Malaysia Sovereign Sukuk Bhd. The ratings agency said Malaysia Sovereign Sukuk Bhd. is a special-purpose company incorporated in Malaysia for issuing sukuk trust certificates. Under this arrangement, the issuer will enter into an asset sale and purchase agreement for not less than 26% of the issued amount, a grant of rights to services agreement for no more than 26% of the issued amount, and Murabaha agreement agreement for not more than 48% of the issued amount with Malaysia.

Turkey's Islamic banks are turning to Malaysia to cut costs as stubbornly high interest rates and slow trading hamper development of the domestic Turk?sh sukuk market. Kuveyt Türk Kat?l?m Bankas? A? plans to offer a five-year bond this week via private placement from a 2 billion ringgit ($539 million) sukuk program. Türkiye Finans Kat?l?m Bankas? A? was the first Turkish bank to sell the debt in Malaysia last year, issuing similar-maturity securities at a coupon of 6 percent. It paid 15.2 percent for a 2017 lira-denominated sukuk. Corporates from Indonesia and France are also coming to Malaysia to raise funds.

Japan is the latest global financial hub to start making inroads into Islamic finance, a move that could help strengthen regional economic ties and give its lenders an edge in winning business in markets whose growth prospects far outpace their home turf. A regulatory effort is expected to facilitate development of the sector, and could even help Japan counter any loss of regional influence ahead of the launch of the China-led Asian Infrastructure Investment Bank. Japan's Financial Services Agency (FSA) is considering allowing banks to provide Islamic products in the domestic market for the first time.

The 95% Muslim Population of Kashmir among which pre-eminent section is far away from modern banking system because of its Ribah (Interest) meticulously verboten by Qur’an. Kashmiri business class also desire for an alternative banking system; here the preferable economic management is visible since the decades. Various federations should be designed for the micro establishment of Islamic banking in Kashmir by taking the examples of Kerala, Maharashtra and various other Micro-economic institutions running in the country. The Non-banking Finance Corporations, Investment Alternative Credits should be introduced for the economic deprived section of Kashmir.

Indonesia's sharia banks expect to raise a large amount of inexpensive funds from Islamic charity foundations following the signing of a memorandum of understanding (MoU) between Bank Indonesia, the Indonesian Ulema Council (MUI) and several alms and zakat collecting bodies.Under the agreement signed in Jakarta on Monday, the central bank and the MUI's National Sharia Council (DSN) agreed to work together to encourage the Islamic charity foundations to keep their funds in the country's sharia banks.

The Malaysian Islamic banking arm of HSBC Holdings has raised 750 million ringgit ($205 million) from the sale of 5-year Islamic bonds at a yield of 4.24 percent. The sale is the third tranche of the lender's overall 3 billion ringgit sukuk programme, sold using an agency-based structure known as 'wakala'. HSBC Amanah Malaysia Bhd pulled in strong demand, with the final book exceeding 1.38 billion ringgit at a bid-to-cover ratio of 1.84 times. Final pricing came at the low end of guidance, which started at 4.22-4.28 percent. As orders poured in, the guidance was tightened to 4.22-4.25 percent within a few hours after books were opened.