Asia

PT Bank Negara Indonesia to sell sukuk in Malaysia

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.

Securities Commission, Malaysia Approves 3 New Foreign Islamic Fund Managers

News Agency Bernama reported on 29 January that 3 new foreign Islamic fund management companies (IFMCs) have been approved by the Securities Commission to start operations in Malaysia:

The new companies are Aberdeen Islamic Asset Management Sdn Bhd, BNP Paribas Islamic Asset Management Sdn Bhd and Nomura Islamic Asset Management Sdn Bhd; the others who have been approved to establish operations are Kuwait Finance House (Malaysia), DBS Asset Management, CIMB-Principal Asset Management, Global Investment House and Reliance Asset Management.

Allianz SE Life Reinsurance approval to establish a separate fund to support for Family Re-Takaful

Allianz Re has announced that Allianz SE Life Reinsurance Branch Labuan (ARLL), recently recieved regulatory approval to establish a separate fund to support the life and health retakaful business (Family Retakaful). As a branch office of Allianz SE, ARLL enjoys an S&P rating of "AA" and A.M.Best rating of "A ". ARLL will offer retakaful solutions to Family Takaful providers.

Benchmark, India launches Exchange Traded Fund

Shailesh Menon reported in Economic Times on 29 January that Benchmark Asset Management is launching a Shariah-compliant open-ended exchange traded fund. The scheme opens for subscription on February 4 and closes on February 25.

Turkey sovereign bond sales quarter of expectations

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 sets coupon rate for retail sukuk

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.

Pakistan’s Islamic Banks Plan to Open 230 New Outlets in 2009

Shanthy Nambiar and Farhan Sharif reported on Bloomberg, 27 January, that Pakistan's Islamic banks plan to expand their network of outlets this year to take advantage of rising demand for Shariah-compliant financing according to Pervez Said, director of Islamic banking at the State Bank of Pakistan. These banks have 500 branches, after adding 210 outlets last year. Pakistan is promoting growth in Islamic finance to expand the reach of the banking sector which has less than 25 million deposit accounts. Shariah-compliant facilities are forecast to rise to 277 billion rupees ($3.5 billion) this year from 185 billion in 2008, according to central bank data.

Dow Jones Islamic Market Index Monthly Performance Report

Press Release - full text attached:

New York (January 27, 2009) — Based on the close of trading on January 26, the global Dow Jones Islamic Market Titans 100 Index, which measures the performance of 100 of the leading Shari’ah compliant stocks globally, lost -5.55% month-to-date, closing at 1646.71. In comparison, the Dow Jones Global Titans 50 Index, which measures the 50 biggest companies worldwide, posted a loss of -9.00%, closing at 131.03.

- The Dow Jones Islamic Market Asia/Pacific Titans 25 Index, which measures the performance of 25 of the leading Shari’ah compliant stocks in the Asia/Pacific region, decreased -9.90%, closing at 1252.00. The Dow Jones Asian Titans 50 Index, in comparison, posted a loss of -11.40%, closing at 90.89.

- Measuring Europe, the Dow Jones Islamic Market Europe Titans 25 Index, which measures the performance of the 25 of the leading Shari’ah compliant stocks in Europe, closed at 1596.39, a loss of -7.60%, while the pan-European blue chip Dow Jones STOXX 50 Index lost -10.97%, closing at 1926.07.

Axis REIT considers Islamic financing

The Star Malaysia reported on January 24 that AXIS Real Estate Investment Trust (REIT) is looking at various options to raise capital, including Islamic financing, to buy more properties. The REIT became Sharia compliant last December.

CEO is Stewart LaBrooy.

2008 Sees Worst Decline in Sukuk Market, Improvement in Islamic Syndicated Lending, Says IFIS

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.

Turkey: Treasury to issue non-interest bonds

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."

Sukuk market struggles

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.

HSBC launches Amanah India Sharia Portfolio

The portfolio management services division of HSBC Asset Management has launched the actively managed, open-ended HSBC Amanah India Shariah Portfolio. The portfolio will be benchmarked against the Dow Jones Islamic Market India Index and the BSE 500.

CEO of HSBC Asset Management is Mr Vikramaaditya.

Islamic Bank of Asia in Singapore Sukuk job

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.

Singapore plans S$ 200 mn Sukuk programme

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.

South Korea interested in Islamic finance

The Financial Supervisory Service (FSS) Governor Kim Jong-chang sees Islamic finance as a potential new alternative in overcoming the global financial crisis pointing out that reckless distribution of complicated derivative products throughout the global market, detached from the real economy, put the global financial market into crisis.

The annual seminar, held in Japan and Hong Kong in the last two years, is now under way in Seoul, jointly hosted by the Islamic Financial Services Board (IFSB), the Financial Services Commission (FSC) and the FSS.

Kim said the regulator would focus on setting up infrastructure for Islamic finance in the country.

Malaysia Bina Puri unit gets Islamic financing

A unit of Malaysian builder Bina Puri Holdings Bhd has secured RM 1.04 bn of Islamic financing to build a highway, Reuters citing Bernana, the official news agency.

Singapore's Agni Inc plans sukuk deals

Singapore renewable energy firm Agni Inc will sell more than RM 900 mn Sukuk Al Ijara according to a Malaysian newspaper.

HLTM Takaful launches capital protection investment-linked scheme

HLTM Takaful launches capital protection investment-linked scheme called The Alpha Crescent Investment Plan, which is a 3-year 100% capital protected plan. It is based on the concept of murabahah and wa’ad where the potential investment returns at maturity were referenced against the performance of the Alpha Crescent Index.

HLTM Takaful, which is managing the plan, said it would be distributed by Hong Leong Bank Bhd.

HLTM Takaful chief executive officer is Ab Latiff Abu Bakar.

Sukuk Issuance Fell Dramatically In 2008 But Long-Term Market Prospects Are Good, Says S&P

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.

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