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Monday, 8 October 2012

Standard & Poor’s Affirms AAA Credit Rating to IDB for 11th Consecutive Year

Jeddah, 06.10.2012 - Standard & Poor’s (S&P), one of the main credit rating agencies in the world, has for the 11th consecutive year, reaffirmed its “AAA” Long-term Issuer Credit Rating and “A-1+” Short-Term Issuer Credit Rating with a “Stable Outlook” to the Islamic Development Bank (IDB). S&P's report highlighted that the rating reflects IDB’s extremely strong capitalization, strong liquidity, historically well-performing asset portfolio and preferred lender treatment received from its member countries, as well as the strong shareholders’ support. The recent rating comes not long after the world’s three main rating agencies, Standard & Poor's, Fitch Ratings and Moody’s, in last July reaffirmed their highest Rating “AAA” to the IDB’s expanded US$ 6.5 billion Trust Certificate Issuance “Sukuk” Program and the US$ 800 million issuance within the same Program in June 2012. 

On his part, Dr. Ahmad Mohamed Ali, President of the IDB Group, commended the strong backing of the member countries and congratulated the stakeholders and the Bank's staff members on the great achievement. He highlighted that during the past years, the Bank continued its reform efforts aimed at improving performance through the adoption of a more suitable organizational structure, enhanced managerial skills and better governance. All these will help realize greater development achievements in line with IDB’s Vision 1440H (2020G), he stated. (IDB)

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Islamic banking thrives as playing field levelled

Growing demand across a number of sectors, rational pricing and innovative products are trends that are shaping the future of Islamic banking and the finance industry
Despite continuing tensions across the Middle East and North Africa, key regions for this niche industry, Islamic finance continues to make headlines.
A well-publicised shortage of liquidity in the United States and European markets has resulted in organisations looking more towards funding from sources in the Middle East and South East Asia. There is a move towards more deals being funded from Islamic investors through the debt capital markets.
This uplift is also being driven by a better understanding of the products, their risks and their returns.

Education surrounding Islamic products has gained strong momentum following the spotlight turning on the "engineering" of financial products following the 2008 financial crisis.
This has resulted in accounting and financial bodies playing more of a role in the development, understanding and governance around the delivery of a wide range of Islamic products across the wholesale and retail sectors.
Globally, Islamic banking assets are said to be growing twice as fast as conventional banking assets and are expected to reach US$1.1 trillion (Dh4.04tn) this year, up 33 per cent from 2010.
The additional source of liquidity offered by Islamic finance has attracted the interest of non-Islamic market participants, especially where the pricing and commercial terms are identical to those used under conventional loan financing techniques.
As a result, it is no surprise that that a number of non-Islamic institutions have shown a desire to tap into the Islamic markets and diversify their sources of funding - with GE Capital, Nomura and Goldman Sachs notable examples.
As the popularity of Islamic finance continues to grow, so does its jurisdictional coverage and this has led to governments and central banks to promote the growth of Islamic finance.
Against this backdrop, western governments have taken steps to adjust their legal regulatory framework to accommodate Islamic finance products and, in the GCC, a new regulatory framework for Islamic finance is being pushed forward in Oman.
Broadly speaking, the approach taken by each of these governments has been to encourage growth through levelling the playing field - to ensure equal legal and regulatory treatment between Islamic and conventional forms of finance.
The strategic importance of becoming an Islamic finance hub should not be overlooked. Not only does Islamic finance provide an important source of liquidity, but it also is likely to play a significant role in the reshaping of global financial centres in the post-financial crisis, alongside more banking regulation.
The phasing in of Basel III standards around the world over the next few years is yet another factor that may ultimately favour Islamic banking.
These standards could potentially make trade finance activity more expensive by requiring banks to increase capital reserves.
However, Islamic banks have tended to adhere to stricter capital requirements, and are therefore less likely to have additional costs that affect their ability to compete in the lucrative trade finance space.
There will always be a demand for "real-economy" trade finance products, but the approach to Islamic trade financing activity has been quite patchy to-date.
However, over time, we should see Islamic trade finance establish itself as a strong cornerstone of the Islamic finance industry. Some would argue that the Islamic finance industry should already be doing a lot more to encourage this kind of trade activity.
Where the project finance market is concerned, there have been strong levels of project activity over the past few years in the Middle East as regional economies emerge from the shadows of the global credit crunch.
Saudi Arabia continues to dominate, but significant rebuilding and new infrastructure demands across the North African countries as they emerge from the Arab Spring will undoubtedly attract the further deployment of Islamic funds.
Although the demand for Islamic project financing continues to grow, concerns remain over whether Islamic banks have the necessary capital bases to fund the requirements of the larger projects on their own - without being integrated within a much wider "multi-sourced" financing arrangement.
Despite this concern, it is expected that the proportion of project financings that include an Islamic tranche will continue to grow and, furthermore, that the number of project financings that have multiple Islamic tranches to them - including of particular note, project sukuk - will also increase.
What is certain is that future prospects for the continued growth of Islamic banking look optimistic.
With the backdrop of the euro-zone crisis, as well as demand for rebuilding regional economies in the post-Arab Spring, Islamic finance looks set to grow in its wider appeal for a long time to come.
What is certain is the rise in popularity will continue; what is less clear is which countries will emerge as Islamic financing hubs and whether they will be compelling enough to attract some of the Islamic capital and investment away from the Arabian Gulf.

(The National / 07 Oct 2012)

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New Zealand launches Halal guide for Muslim tourists

As Muslim travelers increasingly change their tourism preferences from traditional trips to Mecca to beach holidays, a number of countries are adapting their tourism offers to the Islamic culture and beliefs. Last Friday New Zealand launched a new culinary tourism guide focusing on meeting the needs of Halal travelers.
New Zealand Tourism and Christchurch International Airport have launched a new culinary tourism guide focusing on meeting the needs of Halal travelers. Wanting to capitalize on the country's geographic position -- close to some of the world's largest Muslim populations like Indonesia and Malaysia, the new guide aims to attract one of the world's fastest growing tourism markets.
The guide provides general tourism information as well as a list of Halal classified restaurants and cafes including Halal-certified and vegetarian dishes or vegan cuisine. The new guide will be distributed among travel agents and their customers as well as New Zealand embassies offshore.
In recent years, Muslim tourism in New Zealand has been growing steadily. Last August alone, the number of Muslim visitors to the country was up by 141 percent, compared to the same month last year. According to Tourism New Zealand, Muslim tourists' expenditure is expected to rise to more than 13 percent of the entire global tourism expenditure by 2020.
As part of the program, the agency is offering a series of workshops for the tourism industry, with the aim of providing information on how to meet needs and expectations of the Halal market.
Halal tourism is a new product in the tourism market, designed to meet the needs and beliefs of Islamic culture. Some hotels like Club Familia, have been adapting their practices to suit Islamic customs, especially in countries such as Turkey. These include Halal food, separate swimming pools for men and women, no alcoholic drinks and, women-only beach areas with Islamic swimming etiquette. Some hotels also include prayer facilities.
This year, Australia's Queensland office of tourism advertised the Gold Coast as a place to spend Ramadan, with the phrase "Why not try Gold Coast for a cooler Ramadan this year?"
(Global Travel Industry News / 07 Oct 2012)

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