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Sunday, 15 June 2014

CIMB to jointly arrange £200 mil UK sukuk

CIMB Group Bhd is among five international banks that has been mandated to arrange the British government’s £200 million (RM1.08 billion) sovereign sukuk, the first to be issued by a Western government.
The sukuk, which according to Her Majesty’s Treasury website will be issued “in the coming weeks”, will have a tenure of five years and use the Al-Ijara structure.
It will be underpinned by rental income from three central government office properties, which will remain in government ownership during the lifetime of the sukuk.
The website also announced the appointment of CIMB as part of a syndicate of five banks (that has been mandated to arrange the deal .
The other banks are HSBC, Barwa Bank (Qatar), National Bank of Abu Dhabi (UAE) and Standard Chartered.
The British government first toyed with the sovereign sukuk idea six years ago but was pushed to shelve the plan because the issuance was deemed “too expensive” for the government to structure then.
Prime Minister David Cameron, however, announced last year plans to make London the primary leading hub for Islamic finance in Europe as well as the world, alongside Kuala Lumpur and Dubai.
Issuance of a sovereign sukuk will underscore this goal.
Malaysia has recorded spectacular growth on the sukuk front with a 69 per cent share totalling US$82.4 billion (RM271 billion) of total world issuance as at end-2013, according to a report published by the Malaysia International Islamic Financial Centre (MIFC) in January.
CIMB, through CIMB Islamic Bank Bhd, is also one of the country’s strongest sukuk players with deals encompassing Projek Lebuhraya Usahasama Bhd’s sukuk programme of RM11 billion, Khazanah Nasional Bhd’s 300 million yuan (RM155.65 million) trust certificates due this year and Petroliam Nasional Bhd’s US$4.5 billion (RM14.4 billion) trust certificates.
In an interview with Business Times late last year, CIMB Islamic deputy chief executive officer Mohamad Safri Shahul Hamid had shared his enthusiasm in the wake of the British sovereign sukuk announcement.
“Britain is an economic powerhouse, it is one part of the G-20 countries, and to have a sukuk being issued out of a G-20 country is definitely a step in the right direction for Islamic finance. The sector is definitely booming, but now we have the support of London, the default European Islamic finance centre, to help us expand our wings,” he said, noting that spillover effects of the sukuk will be tremendous.
he sukuk will diversify the asset class of syariah-compliant asset management. This is the first time a pound sterling sukuk has been in the market and it will definitely provide more opportunities for all parties involved, including the issuer, in this case the British government, and the potential investors.

(Malaysia Hronicle / 14 June 2014)
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