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Wednesday, 23 January 2013

UAE: Dubai Said to Sell Sukuk, Debt 30-Year Bonds Amid Rally

Dubai raised $1.25 billion in 10- year sukuk and its first 30-year bonds as the Persian Gulf emirate took advantage of tumbling borrowing costs, according to six people familiar with the matter.
The government sold $750 million in Islamic bonds at 3.875 percent and $500 million in 30-year notes at 5.375 percent, according to the people, who asked not to be named because the details are private. Dubai last tapped global bond markets in April when it borrowed a similar amount, including $650 million of 10-year sukuk at a 6.45 percent coupon.
Dubai’s borrowing costs have tumbled as the emirate’s economy recovers from the brink of default in 2009. The government plans to more than double economic growth to an average of 4.6 percent through 2015, according to the bond prospectus, compared with 1.75 percent between 2008 and 2011.
“This new deal is proof that Dubai has regained market confidence which has allowed them to bring down their borrowing costs significantly,” said Hakim Azaiez, the head of investment at GCA Asset Management in London. “Dubai pulled themselves out of the crisis with phenomenal momentum.”

‘Growing Exponentially’

The sukuk issuance is the first sovereign sale in the six- nation Gulf Cooperation Council this year, according to data compiled by Bloomberg. Sales of bonds that comply with Islam’s ban on interest surged to a record $21 billion in the region last year as borrowing costs plunged. The yield on Dubai’s 6.396 percent sukuk due in 2014 dropped 344 basis points, or 3.44 percentage points, in 2012 to 2.13 percent, the data show.
“Appetite for Islamic paper is growing exponentially, and sentiment toward Dubai is incredibly positive,” Ghassan Chehayeb, research director for the Middle East and North Africa at Exotix Ltd., said today. “The emirate has significant refinancing needs in 2015/2016, so it is critical that they continue to manage this challenging maturity schedule in advance.”
Dubai, the second-biggest sheikhdom in the United Arab Emirates, raked up $113 billion in debt to turn itself into a regional hub for commerce, transport and financial services, before teetering on the brink of default in 2009. Dubai state- linked maturities, not including restructured loans, amount to about $7 billion this year, almost $32 billion in 2014 and $9.6 billion in 2015, according to Bank of America Merrill Lynch estimates.

‘Improved Significantly’

The emirate’s credit risk dropped more than peers in the Middle East last year as state-linked companies paid and restructured debt. The cost of insuring the emirate’s unrated bonds for five years has retreated 15 basis points this month to 210 yesterday, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
“Investor’s perception for Dubai credit risk has improved significantly in 2012 and the strong risk-on momentum continues into 2013,” Apostolos Bantis, a credit analyst at Commerzbank AG in London, said yesterday.
The government hired HSBC Holdings Plc (HSBA), Standard Chartered Plc (STAN), Emirates NBD PJSC (EMIRATES), Dubai Islamic Bank PJSC (DIB) and National Bank of Abu Dhabi PJSC to arrange the sale, the people said.

Islamic Hub

Dubai plans to create an Islamic finance council to regulate equity and fixed-income products as it seeks to become a hub for the industry, taking on centers such Bahrain and Malaysia, home to the world’s biggest sukuk market. Islamic finance will become one of the economy’s “core” industries, the government said this month.
The premium investors demand to own Dubai’s bonds over Malaysia’s 3.928 percent Shariah-compliant notes due June 2015 narrowed five basis points this month to 75 today.

(Bloomberg / 22 Jan 2013)

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UAE: Islamic finance industry growing as Rakbank launches more products

Rakbank is starting 2013 with the launch of its new Islamic banking window. The bank’s Islamic banking services will be offered through a separate brand, Rakbank Amal, to include a wide range of products from accounts, loans and cards to takaful policies.

“As the fastest growing bank in the region, introducing Islamic Banking is the natural direction for Rakbank as it strives to better serve existing and potential customers in the country through added choice,” said Graham Honeybill, Rakbank chief executive officer.
Just like Rakbank brought innovation into conventional banking through trendsetting products, online solutions, and award-winning customer service, Rakbank Amal aims to bring the same foundations into Islamic banking to enhance the local Islamic Banking market. “The bank’s solid reputation for success and its commitment to customer service pave the way for a promising foundation for Amal with the potential to set itself apart in a crowded market,” added Mufaddal Khumri, Rakbank head of Islamic Banking.
Available throughout the Bank’s 33 branches, Rakbank Amal provides financial solutions to a wide customer base with a preference for Shariah-compliant products and services. “With rising investment flows in Islamic Finance in the UAE and Dubai’s ambitious plans to set up an integrated platform for an Islamic Economy, Rakbank aims to be at the forefront of Islamic Banking solutions to meet growing local demand,” explained Khumri.
Rakbank Amal’s Shariah-compliant products include Jood account.

(Albawaba Business / 22 Jan 2013)

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Islamic banking - an interview with Sheikh Nedham Yaqubi

An interview with Sheikh Nedham Yaqubi on Islamic banking.
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Beautiful recitation of Quranic verses from Surah Baqarah concerning Riba i.e. Usury or Interest

Beautiful recitation of Quranic verses from Surah Baqarah concerning Riba i.e. Usury or Interest

Those who swallow down usury cannot arise except as one whom Shaitan has prostrated by (his) touch does rise. That is because they say, trading is only like usury; and Allah has allowed trading and forbidden usury. To whomsoever then the admonition has come from his Lord, then he desists, he shall have what has already passed, and his affair is in the hands of Allah; and whoever returns (to it)-- these arc the inmates of the fire; they shall abide in it.

Allah does not bless usury, and He causes charitable deeds to prosper, and Allah does not love any ungrateful sinner.

Surely they who believe and do good deeds and keep up prayer and pay the poor-rate they shall have their reward from their Lord, and they shall have no fear, nor shall they grieve.

O you who believe! Be careful of (your duty to) Allah and relinquish what remains (due) from usury, if you are believers.

But if you do (it) not, then be apprised of war from Allah and His Apostle; and if you repent, then you shall have your capital; neither shall you make (the debtor) suffer loss, nor shall you be made to suffer loss.

And if (the debtor) is in straitness, then let there be postponement until (he is in) ease; and that you remit (it) as alms is better for you, if you knew.

And guard yourselves against a day in which you shall be returned to Allah; then every soul shall be paid back in full what it has earned, and they shall not be dealt with unjustly.

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