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Tuesday, 7 January 2014

Oman: Sohar Islamic’s Housing Finance Covers 80% of Property Value

Bank Sohar understands that one of the greatest joys is to own or build your own home. The bank’s Islamic banking arm, Sohar Islamic, offers clients a range of options to suit their specific needs, keeping in mind the Shariah compliancy and other Islamic regulations.
Sohar Islamic’s home finance programme is fully compatible with Islamic Shariah law and provides a comprehensive Islamic finance solution. This product is distinguished for its affordability and flexible terms which offer financing for up to 80 per cent of the property value, with a repayment period of up to 25 years at very competitive profit rates and quick processing time.
Mohammad Haris, AGM, head of Islamic banking, said, “Sohar Islamic’s housing finance programmes differ from a conventional ‘interest mortgage’ because they provide financial help without our clients having to pay us interest. We can do this by employing two accepted methods of Islamic finance - Murabaha and Ijara - both widely used in the Muslim world and approved by Shariah law.’”
The housing finance programme comes within a unique and flexible framework catering to the varied financing needs of customers wishing to acquire real estate property at competitive leasing rates and with financing up to 80 per cent of the price within a flexible financing period of up to 25 years. In addition, preferential profit rates are provided to customers for the first and second year along with the facility to takeover. If required, instalment deferment options are also available for the convenience of the customer.
Among the benefits of this programme is that the beneficiary is not required to pay any early charges if the dues are repaid after one-third of the tenure. The customer can also avail of bundled solutions with a pre-approved auto finance limit. The programme also offers quick processing and co financing and joint customer financing facilities.“The Islamic Housing Finance is only one of the financial products to be offered by Sohar Islamic from a comprehensive bevy of banking solutions covering a wide array of retail and corporate financing needs. These products are developed to the highest international Shariah compliant banking standards,” Haris said.
Sohar Islamic will also provide corporate financial solutions consisting of asset finance, working capital finance, trade finance, treasury and investment products. Bank Sohar has four Sohar Islamic branches, located in Falaj al Qabail, Firq, Saada as well as in the capital city of Muscat.
(Muscatdaily.Com / 06 Jan 2014)
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Nakheel Early Payment to Bolster Soaring Sukuk: Islamic Finance

Nakheel PJSC’s plan to pay more than $1 billion of bank debt early may herald further gains for the Dubai real-estate developer’s Islamic bonds.
Mashreq Capital DIFC Ltd. and Quantum Investment Bank Ltd. said Nakheel’s payments might help extend a rally that cut its sukuk yield by 215 basis points in the past 12 months to a record 6.58 percent Jan. 3, according to data compiled by Bloomberg. That compares with an average 10 basis-point increase to 4.92 percent for Middle East Islamic bonds tracked by JPMorgan Chase & Co. (JPM) indexes.
Nakheel, which had to be bailed out by the government after the credit crisis triggered one of the world’s worst real-estate crashes, said Jan. 4 it will bring forward payments as it benefits from a recovery in Dubai property prices. Knight Frank LLP, an independent global real estate consultancy, expects values in the emirate to rise 10 to 15 percent this year, the most in the world.
“Investors weren’t expecting this and it’s very good news,” Montasser Khelifi, a Dubai-based senior manager for global markets at Quantum Investment, said by phone yesterday. “The prepayments for this year represent almost half of Nakheel’s bank debt and will give them many options, including the ability to refinance.”

‘Strong Message’

Nakheel will pay 2.35 billion dirhams ($640 million) in February, 15 months ahead of schedule, and a further 1.65 billion dirhams in August, Chairman Ali Rashid Lootah said at a press conference. The company’s Islamic bond due August 2016, which at face value pays a profit of 10 percent a year, rose to a record of 108.16 cents on the dollar Dec. 26.
“There is potential for further outperformance from the bond, particularly on the back of this news,” Abdul Kadir Hussain, who oversees about $700 million as chief executive officer at Mashreq Capital in Dubai, said by phone yesterday. “The company has sent a strong message” to lenders, he said.
Nakheel said in June that it would seek to extend the maturity of its bank debt to 2023 from 2015, and improve borrowing terms.

Slowdown Vulnerability

The Islamic bond, which complies with the religion’s ban on interest, totals about 4.4 billion dirhams and was issued to trade creditors as part of measures to delay more than 27 billion dirhams of debt. Nakheel’s profit for the nine months ended Sept. 30 was 1.77 billion dirhams, up from 1.12 billion dirhams a year earlier, the company said in an Oct. 7 statement.
The company’s success relies heavily on the booming Dubai property industry and Nakheel is exposed to a downturn, according to Hussain. A bubble could be forming in the United Arab Emirates real-estate market, Sachin Mohindra and Sherif Salem, portfolio managers at Abu Dhabi-based financial services company Invest AD, said in a report this month.
“A fair amount of Nakheel’s income is from straight forward property development,” Hussain said. “If there was an immediate slowdown they would be vulnerable.”

‘Tight Levels’

The company wrote down the value of its assets by $21 billion over about two years after Dubai property prices tumbled more than 65 percent from their mid-2008 peak. The developer avoided default with $8.6 billion from Dubai’s government. Nakheel now has more then 3,500 units with an estimated sale value of 10 billion dirhams in development, it said in a statement Jan. 4.
Real estate prices in Dubai increased more than 20 percent in 2013, faster than anywhere in the world, Knight Frank said in its Prime Global Residential Forecast.
“Management’s announced intention to prepay Nakheel’s bank debt should definitely be supportive for the sukuk’s price,” Gus Chehayeb, a Dubai-based research director for the Middle East at Exotix Ltd., said by phone yesterday. “Although it would be surprising for the yield to fall much further from its currently tight levels.”
Lootah said Jan. 4 the company won’t have any problems paying back its other bank debt or the sukuk. A spokeswoman for Nakheel declined to comment when contacted by phone yesterday.
(Bloomberg News / 06 Jan 2014)
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