IslamicFinance.de

Press Release

PARIS, January 14, 2009--Despite a dramatic decline in volumes in 2008, the long-term perspectives for global sukuk issuance are still good, said Standard & Poor's Ratings Services in a report published today "Sukuk Market Declined Sharply In 2008, But Long-Term Prospects Remain Strong."

"The decline in sukuk issuance in 2008 was as a result of global market turmoil, drying up of liquidity, widening of credit spreads, and investors' wait-and-see attitude," said Standard & Poor's credit analyst Mohamed Damak. "Although difficult to measure, part of this decline could also have been due to comments about the Sharia compliance of some sukuk by the Accounting and Auditing Organization for Islamic Financial Institutions.

More than 45% of sukuk issued in 2008 were "ijara" (lease financing), most probably as a direct consequence of the debate about Sharia compliance among some scholars. The value of sukuk issued in 2008 dropped by more than 56% compared with 2007, to $14.9 billion. "We do not expect the market to start reviving before the second half of 2009 or early 2010," added Mr. Damak.

Deutsche Bank announced the launch of “Al Mi’yar”, a platform to facilitate the issuance of Sharia compliant securities domiciled in Luxembourg with Luxembourg Financial Group AG as the Sharia investment manager. Deutsche Banks Trust & Securities Services group providing the settlement framework. The platform allows for access of all asset classes including money market instruments.

Bank Al Jazira`s Board plans a SAR 150 million or SAR 0.5 a share, cash dividend payout for 2008.

Vision 3 is strategic alliance formed by the trio of leading Middle Eastern banks, Gulf Finance House (GFH), Ithmaar Bank and Abu Dhabi Investment House (ADIH). The primary goal of Vision 3 is to create tailored Islamic financial institutions. Vision 3 has already announced the creation of InfraCapital, the GCC's first investment bank specialising in the provision of tailored infrastructure development and finance; AgriCap, a new investment vehicle focused entirely on serving agricultural ventures and communities and Hospitality Development Fund (HDF), established to nurture and support opportunities across the global hospitality sector.

The board members include GFH chairman Esam Janahi who will be chairman of the company, Bonyan International chairman and chief executive officer (CEO) Imad Nesnas, ADIH chief executive officer Rashad Janahi and Ithmaar Development Company CEO Mohamed Khalil Al Sayed

Mohammed Rasooldeen reported in Arab News on 12 January that Saudi-based Alinma Bank will launch operations at the end of the 2nd quarter of 2009. The bank had a declared net income of SAR 390 mn for the interim period, including SAR 274 mn pre-operating income. Total assets stood at SAR 15.56 bn with total investments of SAR 14.97 bn, and shareholders' equity SAR15.39 bn.

Abdulmohsen Al-Fares is the chief executive officer of Alinma.

The Shariah guidance committee members are Abdulrahman Ibn Saleh Al-Atram, president, Abdullah Ibn Wakeel Al-Shaikh and Suliman Ibn Turki Al-Turki, members of the board.

A total of 4.01 million child trust funds have been opened since the scheme stated. Latest data from HM Revenue & Customs (HMRC) show since January 2005 4.3 million child trust fund vouchers have been issued – but only three-quarters of parents are investing the vouchers. However, parents investing the average GBP 24 a month into an account could provide their offspring with GBP 9,750 at the age of 18, according to estimates from the Children’s Mutual.

Xinhua reported on 9 January that Gulf Finance House (GFH) launches a new USD 3 bn project in Tunisia, named "Tunis City Communication". In December 2007 GFH has already announced the "Tunis Financial Harbour", with an investment close to USD 3 bn.

TradeArabia published a Reuters News on 8 January that Abu Dhabi's government-owned Al Hilal Bank is unlikely to break even this year and may slow overseas expansion due to the global crisis but will grow organically in the UAE. Al Hilal became operational in June last year and expected originally to turn a profit in 2009.

Gulf Daily News reported on 9 January that Kuwait's Investment Dar, is considering selling a stake in real estate affiliate Oqyana. Daily As-Seyassah said Dar had received an offer from an unidentified Gulf investor to buy 50 % of its stake in Oqyana.

Ameinfo reported on 8 January that Saudi-based Bank Al Jazira plans a SAR 150 mn or SAR 0.5 a share, cash dividend payout for 2008.

Reuters reported on 7 January that Indonesia's finance ministry plans to issue Sukuk for retail investors in February to help finance the state budget said Rahmat Waluyanto, treasury director general at the finance ministry. The yield shall be announced on 5 February and be offered till 20 February, listing on the bourse follows on 26 February.

Gatehouse Bank released that Philip Churchill has been appointed as Head of Real Estate. Philip Churh has been previously Head of Investment Management, Europe for four years with HDG Mansur, fund manager of the HSBC Amanah Global Properties Income Fund.

US based Javelin Investment Management LLC plans to launch the JETS Dow Jones Islamic Market International Index Fund according to the Wall Street Journal on 8 January. Further details were not provided.

Reuters reported on 7 January that the Dubai Multi Commodities Centre Authority (DMCC) and Shariah Capital launched an index tracking the performance of Islamic hedge funds investing in commodities.The index performance will be calculated and reported by Thomson Reuters (TRI.TO). The index is based on four hedge funds, part of the DSAM Kauthar Commodity Fund and investing in gold, energy, natural resources and mining. Each fund has received start capital of $50 million from the DMCC.

Guardian reported based on Reuters on 7 January that market volatility wiped out all of the asset gains made by the Islamic fund management industry in the year to September 2008, citing US-based research and data provider Cerulli Associates. Sharia-compliant fund managers had assets of USD 65 bn at the end of the 3rd quarter 2008, including assets managed via discretionary mandates for institutions and high net-worth individuals and mutual funds. Assets invested in Islamic-compliant mutual funds rose by 50 % while the number of such funds doubled in the three years to 2008. Islamic mutual funds alone accounted for USD 35 bn-- up from USD 23.2 bn gathered in 2005. Sukuk funds remained a rare offering. Once markets stabilise this industry can potentially expand at a rate of above 10 % a year, the report said. Saudi Arabia is currently the largest domestic market for shariah investments. Challenges named in a poll by Cerulli were named the Sharia compliance costs, convincing investors of the Sharia compliance, the discrepancy in Sharia standards and the lack of 3rd party distribution.

Report order form: http://www.cerulli.com/pdfs/2008_Shariah_Info_Packet.pdf

The daily Alqabas reported on 8 January that the Qatar Investment Authority invests Qatary Riyyal 13 billion in the local banking sector, including the three Islamic banks. Qatar International Islamic Bank agreed to the new investor, which is going to hold 20 % of the shares after the capital raise.

Bank of London and The Middle East plc (“BLME”), has announced on 7 January the completion of a 3-year GBP 31.5 mn finance transaction for Premio Group Holdings to refinance Premio’s property portfolio in Mayfair, London. This is the first Islamic finance transaction completed by Premio Group Holdings.

Premio Group Holdings is a joint venture between Chelsfield Partners LLP and Rollpost established in December 2005. Premio owns over 50,000 square ft of prime residential and commercial property in London’s Mayfair.

Advisers to both firms were Alexander Marks, SJ Berwin and KPMG for Premio and Herbert Smith LLP for BLME.

Cecilia Valente and Selcuk Gokoluk reported on 7 January on Reuters that the Sukuk planned by the Turkish government, finds potential buyers in Turkey's institutional investors like Oyak Emeklilik or AK Portfolio. On average, Turkish pension schemes allocate more than 70 percent of their assets to government bonds, with the rest in shares, repo or bank deposits.

Ulf Laessing wrote in Reuters on 6 January that Investment Dar, is in talks with a Saudi investor to sell up to 10 % in luxury car maker Aston Martin, citing the daily newspaper Rai. The firm said in December that they would consider to sell up to 20 %. Further Kuwait Finance House may buy Investment Dar's 40 % stake in a Bahraini financial institution. Eventually the newspaper is quoted Investment Dar considers to sell all majority stakes to an investor group to cover liabilities.

Gulf Daily News reported on 7 January that Kuwait may issues Sukuk or Murabaha facilities using qualified investment firm's assets as collateral. Citing another daily Al Rai, saying the government had finalised plans for a bill to do so, but may need parliament's approval. Several of the investment firms have said they need fresh funds and have difficulties raising them. Global Investment House and Investment Dar both are said as seeking finance up to USD 1 bn. Further the daily newspaper Al Qabas wrote that Global is still waiting response from foreign financers on a 3-month moratorium to repay elder loans.