IslamicFinance.de

Abu Dhabi Islamic Bank (ADIB) is issuing a Tier 1 capital Sukuk to the government of Abu Dhabi, raising AED 2 bn (USD 545 mn). The issuance of the Sukuk was approved by ADIB's board of directors on 3 February 2009, and will be subject to obtaining shareholder approval. The Sukuk will pay an expected return at a rate of 6 % per annum, payable semi-annually in arrears from (and including) the issue date for a period of 5 years, and thereafter at a rate, reset and payable semi-annually in arrears, reflecting the initial margin above the then prevailing six month Emirates Interbank Offered Rate.

Tirad Mahmoudis the Chief Executive Officer of ADIB.

Noor Islamic Bank topped the 2008 Bloomberg list of leading Sharia’ah compliant Lead Arrangers in the UAE and ranked third on the list of leading Islamic finance Book Runners in the country in its first year of operation.

Hussain Al Qemzi is the CEO of Noor Islamic Bank.

Ashurst has formed a multidiscipline team of lawyers from across its global network to assist clients with Islamic finance restructuring and Sharia compliant distressed financings. This comes as a result of increasing client demand for assistance with Sharia compliant transactions and investments that require restructuring due to current market conditions.

Moody's may downgrade its debt and Sukuk ratings of six Dubai companies, including DP World and Emaar Properties by as much as two notches each following a review in the coming weeks.

In addition to Emaar and DP World, Moody's said it was reviewing ratings of DIFC Investments, Dubai Holding Commercial Operations Group, Dubai Electricity and Water Authority (DEWA) and the Jebel Ali Free Zone (JAFZA).

Emirates NBD has launched a fund to take advantage of the high yields currently available in Sukuk following the steep price declines in Q4 2008 caused by the wider turmoil in global financial markets. The Shari’a-compliant Fund targets annualized returns of c.12% over the next four years.

Jamal Bin Ghalaita, General Manager of Consumer Banking and Wealth Management at Emirates NBD, sees Sukuk as undervalued after panic selling last year.

Minimum investment of USD 25,000 for individual investors and USD 1,000,000 for institutional investors. The secondary sukuk market is difficult to access but, by investing through the Fund, investors benefit from scale, diversification, and the skills of expert fund managers. Should the Fund meet certain return targets, the Fund will be called and gains will be locked in for investors.

BNP Paribas Investment Partners currently manages about half a billion USD in Sharia compliant assets and targets according to the chief executive MENA Tariq Al Samahiji to multiply this amount. The bank currently offers equity Sharia management and has recently started marketing its first Islamic bond or sukuk fund.
Al Samahiji expected the sukuk fund to attract investments from institutions and wealthy individuals, but stressed BNP would not market the fund to the retail market.

Caspionet reported on 28 January, that Darakhim Sukuk Basket have been presented in Kazakhstan. It is expected that insurance companies, unit investment funds and pension funds will become the chief buyers of the new investment offer. Basically, they represent the companies of the Middle Eastern states, so they are issues of the central bank of Bahrain, the government of the Arab emirates, Kuwait and Saudi Arabia. It is expected that the profitability will amount to 10 % at a minimum with a circulation period of 3 years.

Business Times reported on 30 January PT Bank Negara Indonesia, the nation’s third-largest state financial services company, plans its first Islamic debt sale in Malaysia, president director Gatot Suwondo said.

Plans are about USD 50 mn, with a 5-year and 10-year maturity if the pricing is attractive.

Nevzat Devranoglu and Thomas Grove reported on 28 January on Reuters that theTurkish Treasury sold only a quarter of an expected YTL 1.89 bn in its first issue of an income-indexed bond, considered a type of Islamic bond, as it attempts to boost capital inflows by tapping the Gulf region.

Indonesia has set a coupon rate of 12 % for its first 3-year retail Sukuk, which is due to be issued on Feb. 25 according to the ministry of finance.

Gatehouse Bank plc has announced the establishment of a USD 1 bn Sukuk programme by Milestone Capital PCC ("Milestone"). Gatehouse Bank is the Arranger and Dealer of the Milestone programme as published in a press release via Zawya on 27 January.

The first Sukuk issue under the Milestone platform was successfully completed recently. The Milestone programme is listed on the Channel Islands Stock Exchange and certificates issued under the programme are entered into the Euroclear and Clearstream clearing systems, with BNP Paribas Securities Services acting as common depositary. Milestone Capital PCC is a Jersey based orphan Protected Cell Company, designed to allow the efficient creation of new, segregated, bankruptcy remote cells. Each cell has the ability to issue a diverse range of Sukuk certificates, which is proving very appealing for issuers and investors alike.

David Testa is the CEO of Gatehouse. Ashurst LLP is the legal advisor to Gatehouse Bank on the transaction.

IFIS published a report on 24 January discussed on Albawaba that Sukuk or Islamic bond markets have witnessed a dramatic decline during 2008, especially during the 4th Quarter, which was the lowest since 2002, and 2008 was a worse year for sukuk than both 2006 and 2007 with no issuances even of a Dollar Sukuk and the total amount dropping to only USD 584 mn in Q4 2008. South East Asia was more severely impacted than the GCC in 2008, with issuance falling by 76% down to USD 6.57 bn for the entire year. The decline in the GCC was quite severe as well, however, with issuance falling to USD 9.06 bn, a 51% drop. The global total for sukuk issuance, USD 15.77 bn, was 66% lower than the figure for 2007. This is the first year on year drop in sukuk issuance since the year 2000.

Islamic syndicated lending expanded from USD 19.6 bn in 2007 to USD 27.2 bn in 2008, a 32% increase. But as with credit markets worldwide, Islamic syndicated lending froze almost completely in Q4 2008.

Tradearabia reported on 22 January that Moody's Investors Service has placed the A2 local and foreign currency issuer ratings for Qatar Real Estate Investment Company (Alaqaria) under review for possible downgrade. The moves comes following the new Qatari government directive to merge Alaqari with Barwa Real Estate Company. Moody's has also placed the $300 million Trust Certificates (sukuk) issued by Qatar Alaqaria Sukuk Company (QASC) under review.

The Treasury of Turkey announced it will sell bonds linked to income at four state enterprises. The Treasury will issue the bonds in Turkish Liras and dollars Jan. 28 after collecting bids Jan. 26 and 27. The total issuance will be YTL 1.89 bn, or USD 1.15 bn. The papers will be linked to income at four state enterprises, namely oil company TPAO, the state stationary office DMO, the government-run airports authority DHMI and the coast safety authority, or KIYEM. The Treasury statement did not clarify whether the new revenue-index bonds were compliant with Islamic investment principles. Last month, Selim Ye?ilba?, the head of the international finance markets department at the Turkish Undersecretariat of Treasury, said to Hürriyet Daily News & Economic Review the new borrowing method would be "based on rent certificates."

Shanthy Nambiar and Aloysius Unditu reported on Bloomberg on 21 January about the outlook of the Sukuk market. A long line of sovereign and corporate issuers in GCC and Asia are delaying their issuance due to market constraints.

The average extra yield on corporate and government sukuk above the London interbank offered rate, or Libor, is now 11.1 %, up from 1.9 % a year ago, according to HSBC-DIFX indices. That spread widened to a record 11.9 % in December, compared with 6.97 % for non-Islamic bonds in the Middle East.

John Irish and Jason Benham reported on Reuters on 20 January about the financing needs of Emaar Properties, Dubai both conventional euro medium term note and Islamic. The notes would be listed on the London Stock Exchange, with HSBC and Royal Bank of Scotland acting as lead arrangers..

According to CPIFinancial on 21 January, Al Salam Bank-Bahrain works with Tadhamon Islamic International Bank in agreement with Rawacheen Al Hijaz to issue Sukuk Manfa’a with a value exceeding SAR 857 mn on Burj Al Jewar, a commercial/residential tower overlooking the Holy Mosque in Mecca. Rawacheen Al Hijaz will act as the lead manager of the Sukuk Manfa’a.

The Sukuk program will give each Sukuk holder the right to benefit from the unit for a period of 19 Hijri years either to use it or sell, lease to others, grant or bequeath. The holders can also exchange their unit with another.

CPIFinancial reported on 20 January that the Islamic Bank of Asia is one of the two Lead arranger for SGD 200 mn Sukuk Al-Ijarah Trust Certificate Issuance Programme from Monetary Authority of Singapore. The bank itself will be the first investor in the programme.

Vince Cook is the CEO of The Islamic Bank of Asia.

Saeed Azhar, Reuters reported on 19 January that Singapore's central bank aims a S$200 million Sukuk Al Ijara programme, to promote the growth of Islamic finance in the state. The underlying asset for this Sukuk programme is the office units of Monetary Authority of Singapore's head office. According to Heng Swee Keat, managing director of the Monetary Authority of Singapore the Sukuk will be the Sharia compliant equivalent of Singapore government securities with the same credit standing.

Mirna Sleiman, Dow Jones Newswires reported on 19 January that Mashreq Capital will launch a USD 50 mn Sukuk fund in Q.
Abdul Kadir Hussain, CEO, sees a target return of between 12% and 20% over the next 12 months.