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Thursday, 31 July 2014

Malaysia: Standard Chartered expects 2014 to be good for sukuk industry

KUALA LUMPUR, July 30 — Standard Chartered Saadiq, the Islamic banking unit of Standard Chartered Bank Malaysia, expects 2014 to be good for the Malaysian sukuk industry, driven by the strength of the economy.
Chief Executive Officer and Global Head, Consumer Banking, Standard Chartered Saadiq, Wasim Saifi, said the bank is already in discussions with several customers in looking at setting up specific sukuk issuances.
“From a global perspective, there is already strong interest in Malaysian ringgit sukuk issuances.
“This is evident from the recent issuance by a Turkish institution which represents a major amount raised by an overseas investor in a single sukuk issuance,” he added.
Wasim told selected media members this at the recent Standard Chartered Malaysia media education session on Islamic Banking.
TF Varlik Kiralama, a wholly-owned asset leasing company of a leading participating bank in Turkey, recently issued a RM800 million sukuk under its inaugural RM3 billion Sukuk Murabahah Programme.
It is the first issuance by a Turkish issuer of Malaysian Ringgit denominated sukuk in the Malaysian debt capital market.
Wasim said the first two quarters look promising for the sukuk industry, buoyed by a robust gross domestic product which posted 6.2 per cent growth in the first.
Despite expectations of a further hike in Malaysia’s key interest rate, he said it would not hold back issuances, as borrowers are unlikely to defer raising money even if the cost of doing so goes up.
Malaysia’s Overnight Policy Rate (OPR) was raised by 25 basis points to 3.25 per cent on July 10, the first increase for the past three years.
“If the OPR goes up, then the cost of raising money will also increase, regardless of bank borrowings or sukuk and impact all options. Therefore, it will not slow down sukuk issuances,” he added.
According to Wasim, the sukuk market was also buoyed by robust overseas transactions this year, alongside Malaysia.
For the first half of 2014, Malaysia accounted for US$41.7 billion or 63 per cent of new sukuk issuances in the global market.
In the primary sukuk market, new issuances registered robust growth of 8.2 per cent globally in first half of 2014, reaching US$66.2 billion from US$61.2 billion in the corresponding half of last year, driven by traditional markets in Malaysia, the Gulf Cooperation Council, as well as transactions in Turkey, Pakistan and the United Kingdom (UK).
This year also marked a landmark year for sukuk issuances.
Hong Kong is positioning for the debut of its first sovereign sukuk in September. The UK will see the debut of its pioneer sovereign sukuk issuance of 200 million pounds in June.
(Malay Mail Online / 30 July 2014)
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