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Tuesday, 29 May 2012

Malaysia: to sell RM2bil sukuk to fund Mass Rapid Transit (MRT) project

KUALA LUMPUR: Malaysia plans to sell at least RM2bil of Islamic bonds to help finance the first phase of construction of a mass railway here, two people familiar with the matter said.

Dana Infra Sdn, a company formed by the Finance Ministry to fund development projects, may increase the offering to RM3bil if there’s sufficient demand, said the people, who declined to be named as the information is private.
No date has been fixed for the sale because of Europe’s debt crisis and marketing may start as early as June, they said.
Proceeds would go to state-owned Mass Rapid Transit Corp, which is overseeing work on a 156-km railway.
The network is targeted at easing congestion in Kuala Lumpur, with the first line scheduled for completion in 2016, the Government said in a 2010 report.
The Government plans to guarantee a total of RM8bil of syariah-compliant bonds for the project, the people said.
Dana Infra may issue an additional RM30bil of the securities via a 50-year programme, which would be announced later, one of the people said.
Irwan Siregar, deputy secretary to the treasury, wasn’t immediately available for comment.
The planned offering follows a record RM30.6bil sale of Islamic bonds, which pay returns from assets to comply with the religion’s ban on interest, by the nation’s toll-road operator PLUS Bhd completed in January.
Malaysian companies issued RM75.6bil of sukuk last year, an all-time high, according to data compiled by Bloomberg. Sales totaled RM15bil in 2012.
(The Star Online / 29 May 2012)
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Sharia products see significant growth

MANAMA: Islamic financial products represent a class of investment which appeals to those looking for socially responsible or ethical investments and are a fast-growing asset class globally.
It is estimated that investors globally hold more than $1.5 trillion in Sharia-compliant assets and currently there are more than 500 funds globally that comply with Islamic principles, Central Bank of Bahrain executive director of financial institutions supervision Abdul Rahman Al Baker said at the opening session of the World Islamic Funds and Financial Markets Conference (WIFFMC2012) at the Gulf Hotel yesterday.
"One-third of these funds were launched during the past seven years, while sukuk is another Islamic financial instrument that shows a significant growth during the past five years.
"It was estimated that the global sukuk market exceed $200 billion by the end of the first quarter of this year. Actually, the year 2012 saw a revival in the global sukuk markets due mainly to gradual recovery of global economy and investors' sentiment which drives the demand for sukuk.
"It is clear that sukuk issuance in the first quarter of 2012 exceeded all expectations reaching a record $43bn globally. This is almost double the average amount of sukuk issued in any given quarter in the past year, and represents half the total amounts of sukuk issued throughout 2011.
"In spite of the recent credit crunch and widespread global economic slowdown, the prospects for growth in Islamic securities markets are likely to be positive," he said.
"This positive trend can be attributed to the rapid expansion and increasing sophistication of the GCC financial markets, as well as the geographical spread of Islamic securities products and services that record remarkable growth in Europe, Asia Pacific countries, North Africa and the energy rich Central Asian states.
"In Bahrain, the mutual funds industry is one of the fastest growing segments of the overall financial sector. With around $9bn in assets under management, through more than 2,700 funds, the industry has been growing at an annual average of about 15pc in recent years. Overall, there are 100 Islamic funds incorporated and registered in Bahrain with total assets of $1.7bn as of March.
"The CBB, through its enabling legislation, promotes the development of new products for investors in both Islamic and traditional finance, while at the same time providing credible regulation in both areas.
"The CBB, having pioneered the development of sukuk, remains active in the sovereign sukuk market, with a total of $1.2bn medium to long-term sukuk issued, complemented by a regular programme of short term issuance," he added.
"Furthermore, the CBB had successfully issued a five-year maturity Islamic Leasing Sukuk in the local market with a value of BD200m.
"It is the CBB's hope that such initiatives will go a long way in harmonising market practices and creating a deep and vibrant Islamic capital market.
"Generally, the potential size of Islamic finance market is vast, and the accelerated establishment of Islamic finance hinges on attracting the flow of these potential funds into Islamic investment.
"However, it is important to ensure that Islamic funds and investment industry have solid and strong foundations for future development and growth."
(Gulf Daily News / 21 May 2012)
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