IslamicFinance.de

Malaysian sovereign wealth fund Khazanah Nasional Berhad is marketing five-year US dollar sukuk in the US Treasuries plus 190bp area. CIMB, DBS and Standard Chartered are lead managers for the deal that is expected to price today. The Reg S senior unsecured bonds will list in Malaysia and Singapore under English and Malaysian law. The sukuk will be issued through Danga Capital Berhad, a special purpose vehicle, with the SWF acting as obligor. They will be issued off a multi-currency Islamic securities issuance programme.

Qatar Islamic Bank (QIB) could use future sukuk issues to back a potential acquisition, its chairman Sheikh Jassim bin Hamad al-Thani said, after shareholders approved increasing the amount it could raise from issuing Islamic bonds. The Gulf state's largest sharia-compliant lender won approval at its annual general meeting to double its sukuk programme to $3 billion, as well as retaining the mandate to issue 3 billion riyals ($824 million) to enhance core capital. QIB was fine with its capital reserves at present, its chairman said as the bank had a total capital adequacy ratio of 14.1 percent at the end of December, above a minimum requirement of 12.5 percent.

Islamic Development Bank (IDB) will start roadshows from Sunday for a potential dollar-denominated sukuk issue for the Jeddah-based supranational institution, a document from lead arrangers showed. The AAA-rated IDB has picked Boubyan Bank, CIMB, Emirates NBD Capital, Gulf International Bank, JP Morgan, Natixis and Standard Chartered Bank to arrange the transaction, the document showed. Investor meetings will start on Sunday in Riyadh before moving to Kuala Lampur on Tuesday and concluding in the United Arab Emirates on Wednesday.

Azerbaijan could see the launch of its first standalone Islamic bank as early as next year as the government makes progress to introduce legislation to facilitate interest-free finance, Behnam Gurbanzada, an advisor to the new venture said. Azerbaijan, alongside Kazakhstan and Tajikistan, are among several central Asian countries creating a more welcoming framework for sharia-compliant banking with the help of the Jeddah-based Islamic Development Bank. A working group of cabinet ministers and the IDB is making progress on the legislation, which would allow the proposed Islamic bank to launch next year, said the independent Islamic finance consultant. The proposed Islamic bank would be able to launch operations as soon as the legislation is passed, said Gurbanzada.

Sharia insurance products have gained in prominence and are steadily securing a foothold in Indonesia, the world's largest Muslim country of more than 200 million. The large Muslim population offers vast, untapped potential for takaful products. However, total takaful insurance and reinsurance gross premiums have stayed low, compared with the entire Indonesian insurance market. Takaful has expanded to account for 6.2% of Indonesia's insurance market by gross written premiums (GWPs) as of end- 2015, from 2.6% as of end-2010. The sector's GWP expanded by around 4.1% to around IDR10.5trn in 2015, slower than the previous year amid a slowdown in the country's real GDP growth but outperforming the conventional insurance product segment that had more modest growth of 1.6%.

The capital markets arm of Abu Dhabi Financial Group (ADFG) has raised its stake in Dubai-listed GFH Financial Group to 10 percent, ADFG said on Wednesday. Integrated Capital's stake was 7.4 percent previously, data from the Dubai Financial Market shows. Bahrain-based GFH, an Islamic investment bank, is among the most traded stocks on Dubai's bourse. The shares have gained 41 percent since the end of November, while Dubai's index fell 4.4 percent over the same period. ADFG has about $3.2 billion in assets under management, its statement said.

Kenya is reviewing all laws and regulations governing its nascent Islamic finance industry to aid the issuance of a debut Islamic law-compliant bond, its attorney general said. The East African nation, which issued its first Eurobond in 2014, wants to expand the range of financing available for infrastructure projects like roads and power plants. The Treasury has said it is looking at the possibility of issuing the sukuk in the 2016/17 fiscal year, starting in July, but it has not offered details. Githu Muigai the review of that entire regulatory framework will be completed in a maximum of nine months. Kenya's central bank licensed two shariah-compliant banks in 2007. At least one firm has since started to offer Shariah-compliant insurance products.

Australia has begun to see a steady stream of property deals using Islamic financing as the attraction of low-risk tenants and a weak Australian dollar offset concerns about the lack of a welcoming tax environment for such transactions. While the emergence of such deals represents a breakthrough for Gulf and Southeast Asian investors, questions remain over how much momentum will develop as Australia has yet to follow the lead of other jurisdictions like Britain and Hong Kong in passing tax law amendments to facilitate Islamic finance. Interest is strong, and structures have now been developed that can suit commercial investment deals as well as development financing.

Oman Telecommunications Co (Omantel) has scrapped plans to issue a $130 million five-year dual-currency sukuk, the former monopoly said. Last month, the state-run company priced the sukuk at a profit rate of 5.3 percent, having received commitments worth $82.16 million in the dollar tranche and 18.4 million rials ($47.86 million) in the rial tranche. But Omantel has shelved plans to issue the sukuk at the present time, it said in a statement to Muscat's bourse. The company said it took this decision following discussions with its advisers, but did not elaborate.

Saudi Arabia's Bank Albilad plans to issue 1 to 2 billion riyals ($267-533 million) of sukuk by the end of the second quarter of 2016 to finance expansion, chief executive Khaled al-Jasser said. The bank plans to open 25 new branches and hire more employees, which Jasser said would likely increase costs this year by 15 to 17 percent. The bank will also move toward a strategy of owning rather than renting its branches, he said. Given weak market conditions, Jasser said the bank would prefer not to distribute dividends at the moment.

Kuwait Finance House (KFH) will set up a sharia-compliant asset management unit under its Turkish bank branch, the lender said on Monday. Kuwait Finance House Turk will establish five sharia-compliant investment funds and offer other investment services under KT Portfoy, the new unit, KFH said in a bourse statement. The establishment of the new firm is conditional on approval from Turkey's capital market authority. KFH's chief executive in January said it would issue Islamic bonds to boost capital reserves at its subsidiary bank in Turkey, even as it looks to restructure its global assets.

The Malta Stock Exchange (MSE) will launch on Monday an Islamic equity index aiming to attract business from Middle East firms, a move it hopes will also prompt the government to issue Islamic bonds. The launch of an Islamic index, developed alongside Dubai-based sharia advisory firm Dar al Sharia, and a debut sovereign sukuk would mirror steps taken by Britain and Luxembourg to develop their own credentials in the sector. In 2011, Malta's financial regulator issued a guidance note on Islamic investment funds, the first EU member country to do so, although no such funds have been listed yet. The exchange is also launching this month a new capital market for small and medium-sized firms.

A report by international charity Oxfam on Monday showed some of the countries most deeply involved in Syria's civil war, including Russia, Saudi Arabia and France, are among the least generous in helping its victims. Oxfam released the report ahead of a donor conference in London on Thursday along with an appeal for increased aid and resettlement abroad for 10 percent of the refugees registered in Syria's neighbours by the end of the year. Most rich countries were contributing less than their "fair share" of financial aid, the amount a country should contribute relative to the size of its economy. Countries gave 56.5 percent of the $8.9 billion requested by aid appeals for 2015, it said.

In a new report, Fitch Ratings says Islamic finance is a mature and developed industry in Saudi Arabia, representing about two-thirds of total bank financing. About 38% comes from Islamic banks and 28% from the Islamic windows of conventional banks. Due to the largely Islamic finance nature of the lending market in Saudi Arabia, the performance and credit matrices of both Islamic and conventional banks are to a large extent similar. All banks are subject to a single supervisory authority and the same disclosure requirements. The Saudi Arabian Monetary Agency (SAMA) regulates sharia-compliant banks in the same way as it regulates conventional banks. However, one of the key differences between conventional and Islamic banks is the structure of their liquidity/investment portfolios.

Islamic Development Bank (IDB) has chosen eight banks to arrange a potential dollar-denominated sukuk for the Jeddah-based supranational institution, sources familiar with the matter said. The AAA-rated IDB has picked Boubyan Bank, CIMB, Commerzbank, Emirates NBD, Gulf International Bank, JP Morgan, Natixis and Standard Chartered to arrange the transaction, two sources with direct knowledge of the matter said. The bank is planning the benchmark-sized sukuk offering in the first quarter, they added. IDB, which last issued a $1 billion five-year Islamic bond in March 2015, is looking to increase its issuance of sukuk, partly to raise its profile among international investors and to secure similar pricing levels to other development banks.

Bahrain's Al Baraka Islamic Bank plans to open a sharia-compliant bank in France next year as the lender seeks to expand into Europe, Chief Executive Adnan Ahmed Yousif said on Sunday. France has one of the largest Muslim populations in Europe but cultural and legal obstacles have impeded the development of its Islamic finance industry. Some Gulf-based Islamic banks that have expanded in Europe have gone elsewhere. Qatar's Masraf Al Rayan owns Al Rayan Bank in the United Kingdom, while Kuwait Finance House's Turkish arm opened its first branch in Germany last year. Al Baraka also plans to acquire a bank in Indonesia either this year or in 2017 and was in talks with the Indonesian central bank governor, Yousif said.

Kuwait Finance House (KFH) is studying the issuance of Islamic bonds that would boost its capital reserves. The offering still requires necessary approvals, its chief executive Mazen al-Nahedh said. The firm could issue capital bonds that either enhance its core Tier 1 capital or its supplementary Tier 2 capital. Besides sukuk plans for the parent company, KFH is also planning to issue Tier 2-enhancing sukuk this year for its Turkish subsidiary. The firm expects the issue will happen this year to support its capital situation so it can grow, he added.

Bahrain's central bank said on Tuesday it is taking steps to close down Iranian-owned Future Bank, which is based in the Gulf state. Bahrain's central bank has not elaborated on its reasons for the action. Future Bank, based in Manama, is a commercial bank which was founded as a joint venture between two Iranian banks - Bank Saderat and Bank Melli - and Bahrain's Ahli United Bank. The bank's assets stood at 569.4 million dinars ($1.51 billion) at the end of September 2015. On Monday, Ebtisam al-Arrayed, head of regulatory policy at the central bank, said that the regulator had yet to make a decision about Future Bank after placing it under its administration last year, along with Iran Insurance Co - the Bahrain branch of an Iranian insurer.

Fitch Ratings says it expects Turkish Islamic banks' loan growth to remain above the sector average, supported by new entrants to the market and increasing penetration, despite intense competition from conventional banks. Excluding the troubled Bank Asya, Islamic banks (participation banks) expanded their loan books 34% YoY in1H15, compared with sector's average of 25%. For 2016 Fitch forecasts 15%-20% loan growth for the sector. In a report published today, Fitch says return on equity could increase in 2016, underpinned by loan growth, but will be sensitive to non-performing loan (NPL) growth due to the banks' fairly high credit risk profiles and a volatile operating environment.

Iran's capital market regulator wants to develop a market for mortgage-backed securities (MBS) and has published rules covering them, the latest move by authorities to revamp the financial sector. MBS could help to stimulate the debt market and spur housing construction in the country of about 80 million people. Iran has seen some issues of MBS but on a small scale, and active trade in them has not developed. The new MBS rules, released by the SEO last week, include strong consumer protection features. They also feature some particularly Iranian aspects that make them different from similar securities elsewhere. The central bank uses tools such as reserve requirement ratios and open market operations to conduct monetary policy.