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Tuesday, 4 March 2014

Malaysia: Prasarana issues RM2 billion sukuk

KUALA LUMPUR- Syarikat Prasarana Negara Bhd has issued a RM2 billion in nominal value sukuk murabahah, comprising RM1.5 billion in nominal value of five-year tranche and RM500 million in nominal value of 10-year guaranteed by the government.
In a statement Tuesday, Prasarana said the sukuk carried a semi-annual profit rate of 4.08 per cent per annum for the five-year tranche and 4.67 per cent per annum for the 10-year tranche.
Prasarana said it would use the sukuk proceeds for its capital expenditure and general working capital purposes, which would be syariah-compliant.
The sukuk were offered through a one-day book-building process, it said.
The company said the five-year tranche received orders of up to RM1.71 billion, which represented a bid-to-cover ratio of 1.14 times.
The orders for the 10-year tranche grew to approximately RM1.775 billion, which represented a bid-to-cover ratio of 3.55 times, it said.
"The offering met with demand from a diverse range of investors and allocated to a mix of government agencies, financial institutions, fund managers, insurance companies and corporate accounts," it said.
Its Group Managing Director, Datuk Seri Shahril Mokhtar, said the sukuk marked another successful issuance undertaken by Prasarana, a testimony to Malaysia as a leader in the sukuk market, both locally and globally.
CIMB Investment Bank Bhd and Maybank Investment Bank Bhd (Maybank IB) are the joint lead arrangers for the sukuk programme and CIMB, Maybank IB together with Kenanga Investment Bank Bhd and RHB Investment Bank Bhd are the joint lead-managers and the joint bookrunners.

(Malaysia Hronicle / 04 March 2014)
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Turkey keen to grow Islamic finance: Borsa Istanbul chief

ISTANBUL – The global financial crisis has highlighted the potential for Islamic financial products, an industry which has achieved the rapid growth in the last decade, the head of the Istanbul Stock Exchange said on Monday.
Ibrahim Turhan, head of Borsa Istanbul claimed that the global Islamic finance industry`s assets were estimated to have reached $1.6 trillion in 2012, and that “structural problems” in international finance could be addressed by using Islamic banking practices.
Turan was speaking at a conference on Islamic finance organized by Borsa Istanbul with the collaboration of the World Bank, the Islamic Development Bank and the Turkish Central Bank, among others. Despite the industry’s growth Turan said that Islamic finance currently constitutes only 1.6 percent of total assets of world finance.
“Some structural problems of financial markets were uncovered in the global financial crisis. At this stage, the world financial market has rediscovered Islamic finance’s asset-based features and … thinks that the increasing gap between capital markets and real markets can be bridged in Islamic finance,” he said.
He also said that the Islamic finance industry`s assets are projected to amount to $6.5 trillion by 2020. Adding that 18 Islamic sukuk (bonds) worth $7.2 billion have been issued in Turkey since 2010, Turhan claimed that the country wanted to make Istanbul the most important center [in the non-interest financing field] of Western and Eastern Europe, the Middle East and North Africa. There are three indexes and four funds consistent with Islamic rules already operating on Borsa Istanbul and the World Bank opened a Global Center for Islamic Finance in Istanbul in October 2013.
Also speaking at the conference was the vice-president of Islamic Development Bank, Abdul Aziz Al Hinai who said: “The developing countries need to have new strategies after the US Federal Reserve decided to cut its controversial bond-buying program."
“Capital structure based on Islamic finance is much more stable than capital based on interest rates.”
Experts in Islamic finance have said that despite the positive developments, moving forward in the deteriorating global economic environment, added to a shortage of education and product awareness in some jurisdictions plus legal and tax issues are just some of the challenges facing Islamic banking.
(Turkishpress.Com / 04 March 2014)
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Morocco's Attijariwafa Bank looks to boost Islamic finance

Attijariwafa Bank, one of the biggest banks in North Africa, will boost its Islamic subsidiary as soon as the Islamic finance bill passes parliament, its managing director said.

Morocco's parliament has started to discuss a bill regulating Islamic banks and sukuk issues after months of delays, after the Islamist-led government adopted it last month.

Parliament's approval will be the last step before fully-fledged Islamic banks can be established in Morocco, whether they are subsidiaries of domestic banks or foreign owned, a measure which could bring in more Gulf Arab investment.
Attijariwafa bank, controlled by the royal family's investment holding company SNI, has been the only Moroccan bank to create an Islamic subsidiary since Morocco began allowing conventional banks to offer a limited set of Islamic financial services in 2010.
Last year the unit, Dar Assafaa, signed a deal enabling it to offer Islamic financial products to 42 percent of state employees ahead of the approval of the draft bill when foreign rivals could step in.
"In order to transform Dar Essafa into a participative bank, we will need to increase its capital by 150 million dirhams, and subsequent investments will depend on how the market develops," Attijariwafa bank's Managing Director Ismail Douiri told Reuters in an interview.
"We have a very competitive market, and Moroccans are too sensitive to product prices, so I don't expect a revolution in the Moroccan banking sector," he said.
He said banking activities would expand by only a few percentage points as Islamic finance was more expensive than conventional banking.
Islamic finance banks are called participative banks under the Moroccan legislation.
Moroccans seem to be attracted by participative finance, but it is almost impossible to have products with the same prices as the conventional finance, at least initially, Douiri said.
Standard and Poor's has estimated that if Islamic products were proposed at higher costs in North Africa, it would probably attract only limited demand.
Over the past few years, Morocco's banks have started to tap the low income banking segment which is by nature more sensitive to pricing, the agency said in a report last month.
"Attijariwafa Bank may seek a foreign partner for its Islamic subsidiary, but it is not a top priority. We are good as we are. If foreigners have more experience in Islamic finance, we have the advantage of knowing the North African market very well," Douiri said.
The bank posted a 4.8 percent drop in its first-half net profit to 2.2 billion dirhams, reflecting an economic slowdown and rising bad debts.
Douiri said financial results of full 2013 would confirm the first half trend.
"The results are coming out in the next few days. I cannot give more details, but bad loans seem steady at the second half of 2013, and would decrease in 2014," Douiri said.
(The Africa Report / 04 March 2014)
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