MBSB plans RM900mil covered sukuk issuance

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) plans its third issuance of covered sukuk worth RM900mil, according to a regulatory filing by credit rating agency RAM Ratings Bhd.

Covered sukuk are rare in Islamic finance but work in much the same way as conventional covered bonds, where investors are entitled to claims not only on the issuer but also on assets backing the structure, giving them two layers of security.

MBSB has raised a combined RM1.2bil worth of covered sukuk in the past two years, under a RM3bil programme.

The third tranche has a tenor of 10 years and has been assigned a preliminary rating of AA1 by RAM Ratings.

The transaction uses a portfolio of personal-financing receivables, which have a weighted-average tenor of 13 years, to provide the additional security.

MBSB was part of a proposed three-way merger of Malaysian lenders, which was called off in January.

It is aiming to double its corporate loan book by 2020 and has plans to convert itself into a full-fledged Islamic lender.

(The Star Online / 14 April 2015)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Zakat takes the spotlight

Although it predated official development assistance, zakat — the Muslim practice of social giving and one of the pillars of Quran — has only gotten ample attention lately. And it has much to do with the need to find new sources of financing for humanitarian aid and development.

Zakat is equivalent to 2.5 percent of a Muslim’s wealth; this goes to certain categories of people, including the needy, the poor and those in debt.

The role of zakat in financing humanitarian action has taken the spotlight ahead of the World Humanitarian Summit, which is slated for 2016. It’s in fact one of the areas the WHS secretariat is “studying in more detail” and discussing with a range of stakeholders, its chief, Jemilah Mahmood, noted in a gathering in London.

“I wouldn't be at all surprised to see it in the 2016 recommendations,” Chloe Stirk, program adviser for the Global Humanitarian Assistance program of Development Initiatives, told Devex.

Magnitude of zakat

Stirk authored a recently launched report exploring the magnitude of zakat. Actual numbers on the global volume of zakat can’t be determined but it’s estimated to be in the tens of billions of dollars per year.

“One big takeaway for me is the scope and potential of zakat as a resource, and yet despite it's clearly huge potential, there’s a lack of really credible evidence or data on just how much is raised, collected and how it's being used and where it's being used,” Stirk said.

Stirk and her team were however able to get figures from Indonesia, Malaysia, Qatar, Saudi Arabia and Yemen — where 17 percent of the world’s Muslim population resides — and funds raised through zakat from these countries currently total $5.7 billion each year.

In these countries, the state collects and distributes zakat, and it gets paid for administering the funds. In cases where neither the state nor a governing entity administers zakat, Muslims can choose who to hand funds to, like nonprofits such as the Islamic Relief Worldwide.

(Devex / 10 April 2015)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com