The programme is launched under shariah principle of wakalah bi-al istithmar and murabahah through a tawarruq arrangement. It ensures flexibility to offer both senior sukuk and subordinated sukuk from time to time. CIMB Islamic Bank is the Shariah advisor for the programme. 

Aeon Credit told the local media, “The senior sukuk under the programme has been accorded a rating of AA3 (Stable) by RAM Rating Services, while the subordinated sukuk is rated A1 (Stable).” 

According to the company, the subordinated sukuk will be considered as capital in order to meet minimum capital adequacy ratio established by Bank Negara Malaysia.  

CIMB Investment Bank and Hong Leong Investment Bank are the joint principal advisers and joint lead arrangers for the programme. That said, CIMB Investment Bank, Hong Leong Investment Bank and MUFG Bank are the joint lead managers. 

Aeon Credit’s last sukuk issuance in October was a 390 million ringgit sale, marking its biggest since its Islamic commercial papers programme in 2015. 

Last month Malaysia’s bond issuances were expected to exceed RM100 billion this year, as a result of the Islamic finance industry’s good performance. Corporate bond patterns ranging between RM85 billion and RM125 billion over the last five years have strengthened the bond market. Also, the bonds, or sukuk that meet Islamic financing principles are expected to demonstrate resilience this year. 

Corporate bonds have grown in issuance size, on average of 27 percent to $9.27 trillion from $2.92 trillion in 2014. 

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The aim of BMT Bina is to have sukuk issuance on the blockchain to fund micro-SMEs and entrepreneurs. The use of blockchain is expected to reduce issuance costs and attract retail investors, according to Khalid Howladar, Chief Strategy Officer at Blossom Finance.

BMT Bina used the SmartSukuk platform introduced by Blossom Finance. According to Blossom Finance CEO Matthew Martin, the SmartSukuk platform makes micro investments accessible, transparent and tradeable — by overcoming the existing conventional barriers in financing. 

Blossom Finance launched the SmartSukuk platform in May last year. The platform was launched to standardise and automate the bonds’ legal, accounting and payment systems. 

The SmartSukuk platform uses ethereum smart contracts to boost efficiency and put sukuk issuance on a global scale. 

BMT Bina Ummah is an Islamic micro finance cooperative based in Yogyakarta. The institution also supports micro-SMEs and entrepreneurs who do not receive conventional financing. BMT Bina general manager Arif Yuliyanto, told the media that, “The additional funds provided by this sukuk offers longer term stable funding and increases the overall amount of financing that we can offer our members.”

In recent times, Islamic finance companies are including environment-friendly and sustainable models in finance to attract all types of target audience in the Gulf and Southeast Asia. 

Technologies such as blockchain and smart contracts are playing a vital role in the bonds market.

The post World’s first blockchain sukuk: BMT Bina Ummah raises $50K appeared first on International Finance.

Markets such as the Middle East, Africa and South Asia continue to reflect steady growth. This is primarily driven by large sukuk issuances  and$1 trillion worth of financial assets across GCC countries. 

International sukuk issuances from major markets remained unchanged in the first nine months of 2019. According to ratings agency Fitch, sukuk issuances with maturity of more than 18 months from the GCC region, Malaysia, Indonesia, Turkey and Pakistan reached $30.6 billion during that period, compared to $31 billion in the same period last year. 

Dubai is one of the world’s largest centres for sukuk listings by value at $62 billion. The media reported that DIFC is a catalyst for the sector’s growth. 

Fitch in its report said, “Beyond the GCC, Malaysia has remained the key source of sukuk supply in 2019. Increased volumes have been driven by Bank Negara Malaysia providing more short-term Islamic Treasury Bills to aid liquidity management at Islamic financial institutions, and also by a surge in local-currency corporate issuance.” 

It appears that macroeconomic and geopolitical factors might impact sukuk issuance. However, new issuances in the future will be supported by refinancing activity. Fitch said that GCC debt markets are still developing. 

The post DIFC records 45% growth in Islamic assets in Q2 2019 appeared first on International Finance.

The sukuk is part of Emaar’s $2 billion trust certificate issuance programme. As part of the programme, the company has planned investor meetings in Singapore, Hong Kong, and London earlier this month.  

It has appointed banks to arrange the sukuk issuance, which may be subject to market conditions. 

The local media reported that Standard Chartered is appointed as a sole global coordinator for the issuance programme. Local banks such as Dubai Islamic Bank, Emirates NBD,  First Abu Dhabi Bank, Mashreq Bank and Sharjah Islamic Bank, in addition to foreign lender Deutsche Bank will jointly manage the process. 

The UAE and the GCC are investing in sukuk market, particularly because of reduced oil price assumptions. However, the challenges in sukuk issuance and geopolitical risks in the Middle East are anticipated to lower sukuk market performance in 2019. 

According to Moody’s, global green sukuk issuance grew by 40 percent to $47.2 billion in the first quarter of 2019. The green sukuk issuance is seen as a necessity to create a favourable regulatory ecosystem for the development of the Islamic economy. 

Emaar Properties ranked 14 among the world’s most powerful real estate brands in 2019. 

The company’s estimate brand value is at $2.7 billion, media reports said. In the first half of 2019, the company generated a net profit of Dh3.11 billion and its revenue reached Dh11.57 billion. 

The post Emaar’s 10-year sukuk to generate 3.9% annual return appeared first on International Finance.

AmInvestment Research said on Wednesday that the firm’s foreign debt accounts for 40 percent of the gross debt of RM1.7 billion as of December last year. Of the debt, RM496 million is expected to be repaid this year, The Star reports.

That is the reason, “the group is earmarking $80 million to $130 million for engineering, procurement and construction projects in Laos, Tanzania and Uzbekistan, as well as working capital for Middle Eastern operations and maintenance contracts.

“While the group has already issued a RM800 milllion sukuk programme in October last year and retained the outstanding proceeds of RM419 million from its RM407 million IPO in February 2017 and RM427 million private placement in January 2018, this new foreign-denominated debt issue circumvents the conversion of the ringgit, which requires Bank Negara approval.”

According to AmInvestment Research,  the firm’s management is expecting ‘strong revenue growth’ this year, factoring in the growing demand in the Middle East and Southeast Asia. That said, the growth will be supported by  Serba Dinamik’s operation and maintenance services. The services nearly account for 89% of the firm’s financial year 2018 revenue.

AmInvestment Research is also optimistic about Serba Dinamik’s ‘O&M business model’. The model is expanding its ‘long-term recurring earnings’ by capitalising on its engineering, procurement, and construction along with its asset ownership platform.

The post Serba Dinamik to raise sukuk issuance up to RM1 billion over three years appeared first on International Finance.

The sukuk program comes at a time when Saudi Arabia faces large funding requirements to finance a budget deficit that we forecast will equal 10.7% of GDP in 2017, and follows the country’s inaugural international sukuk of $9 billion in April 2017. Following a decline in oil prices, Saudi Arabia has had to draw down its reserve assets and resort to a mix of domestic and external debt to fund its deficit. In July 2015, the government resumed the sale of domestic bonds (SAR195 billion in total), but suspended the sales in October 2016 after the issuances crowded out private-sector credit and tightened Saudi banks’ liquidity. We expect that Saudi banks will be in better position to absorb domestic sukuk issuance over the next 12-18 months because their liquidity has improved and credit growth has slowed.

As of May 2017, Saudi banks’ cash balance with SAMA (in excess of statutory reserves) was SAR109 billion (or more than 6x the amount of sukuk issuance), up from SAR53 billion a year earlier. Banks’ credit contracted 0.9% over the same period, after increasing by 9.5% a year earlier, driven by fiscal consolidation affecting economic growth. However, the combination of large stocks of liquid assets and low loan growth took a toll on banks’ net profits. In first-quarter 2017, banks reported a 2.8% drop in net income versus year ago levels. We expect the issuance of Islamic bonds to allow banks to transfer their excess cash reserves to government instruments, which attract a better return and will help banks’ profitability.

In addition to boosting profitability, a new sukuk programme will provide a deeper pool of shariah compliant securities to facilitate liquidity management for domestic Islamic banks. Facing a shortage of shariah-compliant investments that they can hold for liquidity purposes, Islamic banks tend to maintain higher levels of low-yielding cash and Islamic interbank placements on their balance sheet than their conventional peers, which curbs their profitability. As of March 2017, Saudi Islamic banks’ holdings of cash and placements with SAMA and banks equalled 20% of their total assets, versus 16% for conventional Saudi banks, while their investment portfolios accounted for only 8% of their asset base, versus 20% for conventional Saudi banks. We expect that sukuk issued under the program, like other traditional government-backed instruments, will be eligible for repo with SAMA for banks to access cash liquidity

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