News gif Islamic finance news
Dubai Raises $1.25 billion in Islamic Su- kuk Sale Dubai announced that it has raised $1.25 billion from the sale of two tranches of Islamic bonds and that the proceeds will be used for debt refinancing and general budgetary purposes. The five- and 10-year bonds, or Sukuk, were three and half times oversubscribed, a sign investor confidence in the economy is im- proving, a government statement said. The five-year $600 million bonds carry a yield of 4.9 percent while the $650 million 10-year bonds have a yield of 6.45 percent, the state- ment said. The sale generated a book order with more than 260 investors, including fund managers, insurance companies and banks, who bid for more than $4.5 billion. “We are very pleased at the positive market recep- tion to the Sukuk offering,” Abdulrahman Al-Saleh, director general of Dubai’s finance department, said in the statement.
The sale “demonstrates increased investor confidence in the strong long-term value proposition” of Dubai, he said. Foreign and local investors were “happy” with the steps taken by Dubai to counter the impact of the global financial crisis that hit hard in 2009, adding that the sale provides the emirate “enough liquidity” to manage its budget defi- cits and debt repayments.
Dubai World, the Emirate’s largest group, rocked markets across the globe in late 2009 with its debt woes. It announced in March that it has signed a final agreement to restructure $14.7 billion of debt. In Sep- tember 2010, Dubai successfully issued a $1.25 billion bond that was four times oversubscribed. Government-owned carrier Emirates raised $1 billion from the sale of five-year bonds on June 1. Dubai appears to have restored some confidence since its economic crisis, reaping the benefits of having steady economic growth backed by strong performance in trade and tourism. It has also remained stable amid uprisings across the Arab world.
Noor Islamic Bank Raised $2bn worth of Debt Transactions in Turkey It has been reported that Noor Islamic Bank had made $2bn worth of debt trans- actions in Turkey since the beginning of 2011. The Dubai-based bank targets an
additional $1bn before the end of 2012, according to its chief executive officer. “There’s huge demand for financing in Tur- key, mainly in the SME (small and medium enterprises) business. We’ve done $2 bil-
lion...and expect another $1 bn this year,” said Hussain Al Qemzi to Reuters. “The bank is very active in the Sukuk and structured finance syndications, mainly to financial in- stitutions,” he added. The Investment Cor- poration of Dubai and Dubai Holding both own a 25% stake in Noor Islamic bank. The bank does not have a physical presence in Turkey, however, it might apply for a com- mercial banking license in the country later this year.
The prospect of developing nascent Islamic finance market in Turkey seems increasingly attractive to many global and regional banks sensing new business opportunities. Earlier at the begining of April Noor Islamic together with Dubai’s Emirates NBD, National Bank of Abu Dhabi, ABC Islamic Bank and Standard Chartered arranged a $325m dual-currency syndicated Islamic loan for Turkish lender Asya Katilim Bankasi (Bank Asya). Noor Is- lamic also arranged a $350m dual currency, Islamic structured Murabaha syndicated fi- nancing facility for Turkey’s Albaraka Turk at the end of last year.
Micro Takaful A New Innovative Product in the UAE It has been reported that Takaful or Islamic insurance companies are tapping into new markets such as Egypt and Jordan; Islamic finance is expected to receive a boost in North Africa from last year’s Arab Spring uprisings, which removed authoritarian governments that discouraged or neglect- ed sharia-compliant business for political reasons. Ghassan Marrouche, chief executive of Takaful Emarat in the United Arab Emirates, said his company was expecting double-digit growth rates in coming years, supported by the launch of several new products includ- ing a capital-protected instrument and a “mi- crotakaful” product focused on low-income earners. “We want to be positioned well in the UAE market before we move outside,” he said. “It is a very dynamic market.” Bahrain’s Solidarity has moved into Egypt and Jordan. A consortium of Doha-based institutions tapped the Pakistani market by launching
Pak-Qatar Takaful in 2006. Other firms have seen opportunities in markets such as Leba- non, which posted 102 per cent growth in takaful contributions during 2010, and Indo- nesia. A report by actuarial consultants Mil- liman forecasts strong growth for takaful in southeast Asia, suggesting it could become three times as large as the Middle East by 2015.
Ernst & Young forecasts Saudi Arabia’s share of the global takaful market will drop to 44 per cent this year as newer markets grow faster, and the trend of new markets outpacing traditional ones could continue in coming years.
Other companies are focusing on building size in their domestic markets, which could give them economies of scale. Meanwhile, growth of the takaful business is slowing, in- dustry statistics show, and increasing pres- sure on the sector to boost efficiency, roll out new products and explore new markets. Takaful, which has its core markets in the Gulf and Southeast Asia, is one bellwether of consumer appetite for Islamic finance. But profitability has been hit by fierce com- petition and rapid growth of workforces at takaful providers in past years.
Sukuk Market to Set New Record The Sukuk (Islamic bonds) market in the oil-rich Gulf and other countries is ex- pected to exceed $100 billion this year to smash the record $85 billion achieved in 2011, Saudi Arabia’s largest bank said. Despite an expected rise in the six-nation Gulf Cooperation Council (GCC), Malaysia is projected to remain the world’s dominant Sukuk market this year, National Commer- cial Bank (NCB) said.
In contrast, the bond market in the GCC, which controls over 40 per cent of the world’s proven oil wealth, bounced down in the first quarter of 2012 after recording a sharp rise in the fourth quarter of 2011. “Sukuk issu- ance this year appears on track for another all-time record with last year’s $85.4bn set to be comfortably exceeded even under the more cautious projects,” NCB said in its 25-page study on GCC equity markets. “In view of current trends it appears likely that aggregate issuance will clearly exceed $100bn this year. Market innovation looks
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