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Monday, 27 October 2014

Tunisia Plans $500 Million Sukuk Sale by End of November

Tunisia, where citizens started voting for a new parliament, plans to raise $500 million from the sale of sukuk by the end of next month, according to Finance Minister Hakim Ben Hammouda.
Citigroup Inc., Natixis SA, Standard Chartered Plc and Qatar-based QInvest “expressed their willingness to cooperate” and consultations are ongoing, Hammouda said in an interview in Tunis on Oct. 24. Former Finance Minister Elyes Fakhfakh in July 2013 said the nation would raise as much as $700 million from the sale of Islamic bonds, the same month it approved a sukuk law.
“The issuance of sukuk took a long time because of the complexity of this process and lack of experience in this field,” Hammouda said. “But in the end our government decided to have this challenge and to issue sukuk by the end of November.”
Tunisia may follow the U.K. and Hong Kong in selling debut Islamic bonds this year as governments globally seek to attract Shariah-compliant investors. The sovereign sukuk market is expected to reach $30 billion this year, Moody’s Investors Service said last month. Global sukuk sales climbed 13 percent so far this year to $37.8 billion from the same period last year, data compiled by Bloomberg show.
Tunisians cast ballots for a new parliament today, marking a milestone in the North African nation’s transition to democracy following the ouster of President Zine El Abidine Ben Ali more than three years ago. Results are expected Oct. 29, according to the election commission, and presidential elections are scheduled for next month.
The Islamist Ennahda movement won the first free election in 2011 after Ben Ali’s ouster with 37 percent of the vote. It stepped aside earlier this year after a political crisis triggered by the assassination of two secular leaders by Islamist militants.
(Bloomberg / 26 October 2014)
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Islamic finance outlook 'bright'

MANAMA: The GCC Islamic finance industry is expected to maintain its rapid growth over the coming years despite mixed results across sectors this year, according to Standard & Poor's Ratings Services (S&P).
The industry's expansion is expected to be driven by the GCC's robust economic prospects, continued infrastructure needs and rising issuance from governments and government-related entities.
"We remain upbeat on the outlook for the GCC Islamic finance industry, but we have seen mixed fortunes across sectors this year and a broad spectrum of structural issues continuing to pose challenges," Standard & Poor's Middle East managing director and regional head Stuart Anderson said.
Despite growth, the industry remains a demand-driven market, with limited supply.
The expansion and enhancement of existing Islamic finance centres in the GCC and a more transparent regulatory environment are critical to accelerate growth.
The sukuk sector has registered healthy volumes this year with $20.3 billion worth of issuances in the GCC as of October 5, 27.3 per cent higher than the same period last year.
The fall in the issuance of corporate and infrastructure sukuk by almost a third compared to the same period last year was more than compensated by higher issuance from governments and financial institutions.
S&P believes sukuk issuance this year is on course for a 5pc growth from last year.
Refinancing needs from maturing sukuk and the good economic prospects for the GCC underpin our expectations.
Meanwhile, GCC Islamic banks have continued to increase their market share in the region.
Although S&P expects the growth of Islamic banks to gradually converge with that of their conventional peers over the next decade, the market share of Islamic banks will continue to rise in the next few years.
S&P expects total GCC banking assets - both conventional and Islamic - to rise to $2 trillion by next year's end from $1.7trn at last year's end.
The GCC banking credit stock is also expected to climb by around 10 this year and next year.
"Islamic banking growth is being driven by strong economic growth, recovering corporate asset quality cycle and ample financing opportunities.
"We believe Islamic banks will continue growing visibly faster than their peers, particularly in countries that have the highest domestic credit growth prospects," said Mr Anderson.
In contrast to the Islamic banking sector, the takaful sector in the GCC underperformed their conventional peers.
Continued resistance to the concept of insurance has left the market dominated by compulsory lines of business and weakened by fierce price competition.
S&P estimates the GCC takaful sector to generate just over 10pc of total market premiums. The sector is dominated by medical and motor insurance while the provision of life savings products, the mainstay of mature markets, is still undeveloped in the region.
(Gulf Daily News / 27 October 2014)
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