IslamicFinance.de

South African state-owned companies Eskom Holdings SOC Ltd. and Transnet SOC Ltd. are weighing Islamic bond sales after the government sold its first sukuk at a record-low cost. Eskom, the national power utility, said yesterday it will use the sovereign sale as a “barometer” for its own financing plans, while rail and ports operator Transnet has said it may access the market amid growing demand for Shariah-compliant debt. Al Baraka Bank is awaiting regulatory approval for a 300 million-rand ($29 million) issue next year. South Africa sold $500 million of Shariah-compliant bonds two days ago at a 3.9 percent profit rate. Yields on the bonds rose 10 basis points to 4 percent by 5:30 p.m. in Johannesburg yesterday.

South Africa has announced a tenor of 5.75 years for its inaugural sukuk, which is expected to price later this week. Initial profit thoughts on the U.S. dollar benchmark-sized Islamic bond, which matures in June 2020, will be released early this week. South Africa finished investor meetings for the 144A/Reg S deal last Friday. The sovereign is rated Baa1 by Moody's, BBB- by Standard & Poor's and BBB by Fitch. BNP Paribas, KFH Investment and Standard Bank are the lead managers.

Nigeria is gradually opening up to Islamic finance, a move that could develop one of Africa's fastest-growing consumer and corporate banking sectors and establish the country as the African hub for Islamic finance. In recent months, a string of regulatory initiatives have set the groundwork for products such as Islamic bonds (sukuk), insurance (takaful) and interbank lending products, although there is still only a small number of local market participants. Islamic banking is currently offered by the Islamic window of Stanbic IBTC, a unit of South Africa's Standard Bank, and Jaiz Bank, a full-fledged Islamic lender which has operated since 2012. Sterling Bank has been granted approval in principle for an Islamic window, while two more lenders have expressed interest in obtaining licences to operate Islamic Windows.