IslamicFinance.de

A revival of international bond issues from the Gulf is set to draw heavy demand from local and foreign investors, despite the latest geopolitical upheavals in the Middle East and the approach of higher US interest rates. Gulf bond issuance has dried up since early July, because of a traditional summer lull in local investor activity as well as global market instability due to the crisis in Ukraine. But the vast majority of investors have decided that the geopolitics do not come close to posing any existential threat to the rich Gulf Co-operation Council economies. More than geopolitics, the biggest threat to the Gulf’s primary bond market may be expectations for US interest rates. The currency pegs mean eventual US rate hikes are expected to feed through into official Gulf interest rates quickly.

A delegation of the Qatari Businessmen Association (QBA) visited Kenya last week to enhance bilateral business relations between the two countries and open up new areas of investment. The delegation was headed by Sheikh Dr Khalid bin Thani bin Abdulla al-Thani, second deputy to QBA chairman and Ezdan Holding chairman. The delegation included Ezdan Holding CEO Ali Mohamed al-Obaidly and Vodafone Qatar CEO Kyle Whitehill among other businessmen and QBA members. The delegation was received by Kenya’s Minister of Foreign Affairs and International Trade, Amina Mohamed, who brought them together with senior officials from the Kenyan Ministry of Foreign Affairs and members of Kenya’s business community. Sheikh Dr Khalid said Kenya has become a promising and attractive business environment.

The Islamic banks in Qatar outpaced conventional banks in the country in terms of growth in net profit during the second quarter of 2014 (Q2,14). Qatar Islamic Bank (QIB) reported a 15.0 percent YoY bottom-line growth in Q2 14, mainly due to improvement in top-line as well as fee income. Masraf Al Rayan reported 12.1 percent YoY growth in its bottom-line due to strong growth in net financing income, Global Investment House (GIH) noted in its Q2, 14 “GCC Banking Sector” analysis. The GIH analysts who covered five major Qatar-based banks said the loan books of banks in Qatar grew the most in the region, by registering 15.4 percent growth on year-on-year basis, followed by the banks in Saudi Arabia (9 percent), UAE (4.8 percent) and Kuwait (4.6 percent).

Takaud, the Bahrain-based specialist savings and pensions provider for the MENA region, has announced the appointment of an experienced sales management team, which will be based in Bahrain. The new appointments include Loay Ragheb as Chief Distribution Officer and Jason Reeves and Nabil Karameh both as Senior Managers responsible for regional distribution. Eric Van Biesen, Acting Chief Executive Officer TAKAUD, said, that the new appointments underpin the company's focus on expanding direct and third party distribution channels (banks, financial intermediaries, professional consultants), in order to support the on-going rollout of innovative savings and pension solutions for both Retail and Corporate clients across the region.

Kuwait’s Burgan Bank has chosen banks to arrange meetings with investors ahead of a potential issue of a capital-boosting bond. The lender will hold roadshows in Asia, the United Arab Emirates and Europe from Sept. 4, with a bond issue that enhances the bank’s Tier 1 capital ratio to follow, subject to market conditions. Should the US dollar-denominated bond issue happen, it will have a perpetual lifespan and be of benchmark size. Burgan Bank’s chief executive, Eduardo Eguren, said in March that the lender wanted to raise its capital before the end of the year to help it comply with Basel III guidelines, with perpetual bonds a potential route. The investor meetings will be arranged by HSBC as global coordinator and Citi, JPMorgan and National Bank of Abu Dhabi as lead managers.

Construction Week's Leaders in Construction Summit is set to take place on September 3 in Dubai. IHCC, a turnkey solutions provider that specializes in healthcare, education and mixed-use projects, will participate in the Summit by organizing a panel discussion on designing and managing diverse social infrastructure projects including hospitals, schools and universities. IHCC's CEO Sultan Sobhi Batterjee will share insights at a panel discussion that will mull diverse emerging issues in the real estate sector such as the rise in spending on social infrastructure across the GCC, how contractors can win work in this area, what special capabilities are required and best ways to partner with leading international education and healthcare providers.

Qatar is exploring investment opportunities in Ethiopia’s banking, insurance, real-estate development, and health and communication sectors. This was announced by a Qatari businessmen delegation, chaired by Sheikh Dr Khalid bin Thani bin Abdullah al-Thani, chairman of Ezdan Holding Group. Dr Mulatto Shuma, president of Ethiopia, highlighted government’s readiness to offer all possible support to encourage foreign investment in Ethiopia by offering facilities and incentives as well as adopting a policy that protects investments in the country. Other members of the delegation included Ali Abdulrahman al-Hashemi, delegated member of Mackeen Holding Company; Ali Ibrahim Abdulghani, CEO of Qatari Islamic Insurance Company; and Kyle White Hill, CEO of Vodafone Qatar.

Capital Intelligence (CI), has raised Gulf Finance House's (GFH) Long-Term Rating to 'BB' from 'BB-' and affirmed the Short-Term Rating at 'B'. The Outlook for GFH's ratings reverts to 'Stable' from 'Positive' following the rating action. The ratings reflect the recent successful refinancing and resultant extended debt repayment period. Also supporting the ratings is the significant reduction in leverage in recent years and the moderately improved liquidity position. The factors constraining GFH's ratings are the forced debt restructuring a few years ago, an encumbered asset base, and the small balance sheet coupled with single name and sector concentrations. Also constraining the ratings is the still challenging investment environment.

Bahrain's Gulf Finance House (GFH) said on Wednesday that it had signed to obtain a $105 million, five-year Islamic credit facility from Kuwait Finance House, which would help GFH redeem two syndicated debt facilities and allow the release of some major GFH assets. GFH, which suffered heavily in the wake of the global financial crisis and required multiple debt restructurings, said Kuwait Finance House would have an option to convert its outstanding debt into GFH shares. It did not elaborate on the terms of any equity conversion. The Bahraini firm noted that it had paid down some $30 million of current outstanding debt facilities to date in 2014, representing payment of more than 15 percent of its total liabilities.

Abu Dhabi-listed Islamic insurer National Takaful Co (Watania) said on Tuesday that United Arab Emirates regulators had approved the sale of 60.53 percent of the firm to MB UAE Investments and an affiliate of MB. Watania said MB UAE Investments would acquire 51 percent and Al Madina Insurance Co would take 9.53 percent. The group would buy a total of 90.8 million shares. The deadline for the purchase is next Feb. 24, Watania said in the statement. It did not give details such as the purchase price or who would sell the shares. In a separate filing on the Oman bourse, however, Al Madina said it would buy 14.3 million Watania shares for 17.88 million dirhams ($4.87 million), implying it would pay 1.25 dirhams per share.

The DIFC Laws Amendment Law 2014, which amends the Regulatory Law 2004 and various other laws related to the Dubai International Financial Centre, is expected to give a new boost the financial services business from DIFC. The Amendments that will come to effect on August 21 makes a number of significant changes to the Dubai Financial Services Authority’s (DFSA’s) regulatory regime and investment laws. They are an important step in simplifying and improving the structure and procedures for decision making and review of DFSA decisions. They will also strengthen DFSA supervisory and enforcement powers, and improve the supervisory oversight of auditors.

Moody's Investors Service, has today affirmed the Ba1 insurance financial strength rating (IFSR) of National Takaful Insurance Company K.S.C., based in Kuwait. The rating outlook was changed to stable from positive following the decline in the shareholders' and policyholders' (consolidated) equity in 2013. Moody's Ba1 rating reflects National Takaful's good position, with a top-three market share in the domestic Takaful market. The rating affirmation also reflects the recent improvement in underwriting profitability. This has restricted further deterioration in the policyholders' fund. However the change in outlook to stable from positive reflects the decline in consolidated equity.

SEDCO Capital announced assigning the External Shari’a Audit of its $160 million real estate funds to Shariyah Review Bureau (SRB). The two funds which SRB will be periodically auditing the implementation of the Shari’a h guidelines are SEDCO Capital Partners Group Opportunities Fund and SEDCO Capital Real Estate Income Fund I. SRB will independently ensure that the investments, Zakah verification, implementation of the modalities and reporting functions are conducted in accordance with the Shari’a guidelines set out by SEDCO Capital Shari’a Supervisory Board.

Bank Sohar’s Islamic banking Window – Sohar Islamic has now introduced dedicated Construction Financing in Oman. The Construction Finance product provides an Islamic finance solution for anyone looking to build a new residential property or purchase under construction property. This is a complement to its existing Islamic Home Finance Program which offers Shari’ah compliant financing for ready real estate property. The Construction Finance program comes within a flexible framework catering to the financing needs of customers with financing up to 80% of the price within a financing period reaching up to 25 years. In addition, preferential profit rates are provided to customers for the 1st and 2nd year along with the facility to takeover. If required, installment deferment options are also available.

A new study by International Finance Corporation (IFC) showed that around 35 per cent of SMEs in the Middle East and North Africa (MENA) are excluded from the formal banking sector because they seek Sharia-compliant products that are not readily available in the market. The study, which was carried out across nine countries, found a potential market gap of up to $13.2 billion for SME Islamic financing in the region with a corresponding depository potential of $9.71 billion to $15.05 billion across these countries. The study pointed out that apart from a high level of risk aversion that banks in the region have, poor regulatory environments, differing perceptions of Islamic finance, and a lack of relevant products were hindering the growth of Islamic SME banking.

The Council of Saudi Chambers has launched a series of awards for businesswomen with the main objectives to support and encourage Saudi businesswomen to take a more prominent role in the Kingdom’s economy. The awards will highlight achievements in three categories: ‘Leading Young Businesswoman,’ ‘Leading Businesswoman,’ and ‘Productive Families.’ The nominations will be submitted electronically and that no preference will be given to particular geographic regions within the Kingdom. The jury will not include members of the Council, however, in order to ensure the awards are unbiased. Nominations for the awards will closed on September 10. Results will be announced in 2015 to coincide with the Second National Forum.

Eiger Trading launched the first ever fully-automated, Shariah-compliant 24/7 Commodity Murabaha platform, in conjunction with Gulf International Bank’s (GIB) KSA retail arm, under the ‘Meem’ brand name. This fully-automated Islamic e-banking solution offers 24/7 online personal finance and deposits to retail clients in the Kingdom of Saudi Arabia. Eiger and GIB’s combined technology provides online customers with a 24/7 real-time mechanism for executing Shariah-compliant transactions, using commodities all of which are located and deliverable within the Kingdom.

While the UAE Government has launched a number of initiatives this year to support small and medium enterprises (SMEs), there are still industry executives who say that much more needs to be done – especially when it comes to the nascent Islamic economy. The UAE is especially keen to give Emiratis a chance of helping the economy by starting their own businesses, and a number of big companies are promoting the initiatives by inviting SMEs to be their suppliers. Banks have played their part in recent years as they recovered from the financial crisis of 2008. While criticism against banks for not doing enough to fund SME businesses was justified before the financial crisis, when banks were more focused on financing real estate and retail customers, that is no longer the case.

DIFC Investments, the investment arm of the company running Dubai’s financial free zone, is reportedly planning to issue sukuk. The company has appointed banks and could come to market as early as September. Key banks on a 2012 loan deal are among those involved in the new sukuk. DIFC took out a $1 billion syndicated loan in May 2012 with Emirates NBD acting as financial adviser, while Standard Chartered coordinated the debt. Dubai Islamic Bank and Noor Bank also participated in the loan. The purpose of that loan was to refinance a $1.2 billion FRN sukuk that was maturing later that year. The new sukuk, if successful, could be used to refinance that 2012 loan.

The GCC debt markets in 2014 had an active second quarter, particularly in corporate bonds and sukuk. The region's noteworthy issuances include Commercial Bank of Qatar issuing $750m bond. On the sovereign front, Qatar Central Bank (QCB) issued three government bonds amounting to $261m, $577m and $261m in Q2, 2014. UAE corporate bond issuances were dominant in the second quarter. The GCC's ability to shield itself from the regional instability was again on display in the second quarter. Dubai yields continued to decline to their lowest levels in a year, with the yield of 5-6 year bonds reaching 3.27 percent. On the region's IPO market performance, the second quarter of 2014 started off and ended on a high, with a total of seven IPOs, compared to two in Q1, 2014.