Malaysia Sukuk seen picking up

KUALA LUMPUR: Malaysia’s two biggest banks are predicting a pickup in the country’s Islamic bond sales as companies try to refinance debt before the Federal Reserve raises interest rates.

Forecasts that the Fed will keep interest rates lower for longer have given local businesses a bigger window to refinance, according to Malayan Banking Bhd and CIMB Group Holdings Bhd.

MMC Corp, a Kuala Lumpur-based infrastructure firm, started marketing RM1.5bil (US$361mil) of syariah-compliant bonds to refinance non-Islamic loans this month, said managing director Che Khalib Mohamad Noh.

A successful sale by MMC will push local-currency issuance this quarter to RM3bil, nearly half the RM7.2 bil total during the previous three months. An index of Malaysian corporate sukuk yields rated AA- has declined this month after rising the most since 2008 last quarter, while the ringgit posted its biggest surge in 17 years last week amid a rally in emerging-market assets.

“Now is a good time for corporates to tap the market,” said Nik Mukharriz Muhammad, a Kuala Lumpur-based fixed-income analyst at the investment-banking unit of CIMB, Malaysia’s second-biggest lender by assets. “Issuers will be able to get better pricing” before the Fed raises borrowing costs, he said.

Khazanah Nasional Bhd, Malaysia’s sovereign wealth fund, kicked off third-quarter sukuk sales with a RM1.5bil offer last week that’s set to be issued on Oct 19, according to people familiar with the matter who didn’t want to be named as the information isn’t public yet.

The notes due 2022 were sold to yield 4.57%. Jimah Power East Sdn Bhd, a unit of state- owned utility Tenaga Nasional Bhd, is planning a RM10bil Islamic bond sale this month, people familiar with the offer said.

MMC, which has power, ports and construction divisions, hired RHB Investment Bank Bhd as the lead arranger and manager. The offer has been rated AA-, the fourth-highest investment grade, by Malaysian Rating Corp. 

(The Star Online / 15 October 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

Malaysia: Islamic banking players urged to expand overseas

KUALA LUMPUR: The domestic Islamic banking industry players should be brave enough to tap into foreign markets to expand their businesses and grow the industry, says Datuk Dr Mohd Daud Bakar, group executive chairman of Amanie Advisors, syariah advisory firm.

Daud said that companies were too afraid to face the potential risks in the foreign markets.

"They are too obsessed with their own success stories and tend to focus on setting up their businesses only in Malaysia. They should use their expertise to explore outside market.

"In this segment, we have the experts and many countries hope that we bring our capital as well as expertise to set up a Malaysian bank," he told Bernama.

He said Malaysia has the capability to set up banks and companies offering Islamic banking products and services as it is the third biggest Islamic banking industry player in the world after Iran and Saudi Arabia.

Unfortunately, Daud said, Malaysian bankers were not keen, for whatever reason, to go out.

"This is a big failure because they should diversify the risks.

"When you are already a hit in Malaysia, definitely you are able to survive overseas ... investing overseas would offer new exposure and bring back the money.

"If they have businesses outside the country such as Dubai, it can give them advantages in terms of income contribution despite the ringgit's depreciation as the overseas operations use the countries' currencies," he said.

On the company's expansion plan, he said, Amanie Advisors was looking to enter new markets, such as Nigeria, India and Gambia, to provide syariah products and services due to the anticipated strong demand in the next three years.

"We are going to Morocco next week to organise a national event, 'International Participative Finance Forum Casablanca 2015'.

"Our startegy is to focus on new markets as there are less competition compared with the established ones... we want to be more active in the new markets," he said.

The homegrown syariah advisory firm also aimed to be more visible and impactful in the global industry after it won the 'Award of Islamic Economy Knowledge Infrastructure' by Global Islamic Economy Summit last Monday in Dubai, he said.

"We take the award seriously because it went through a one-year process to announce the winner and we do battle with 10-15 global established firms which have their own success stories.

"In order to maintain our standard, we will motivate our people and take on new initiatives to show how impactful we are in the market," he said.

Amanie Advisors specialises in Islamic finance solutions. It offers a wide range of services including syariah advisory and consultancy, training and research and development for institutional and corporate clients.

(The Star Online // 15 October 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