Malaysian and Indonesian pension funds, which have a combined $192 billion of assets, say plans to increase holdings of Islamic bonds are being hampered by a shortage of investment-grade sukuk.
Kuala Lumpur-based Employees Provident Fund and Kumpulan Wang Persaraan (Diperbadankan), Malaysia’s two biggest pension managers, and PT Jaminan Sosial Tenaga Kerja (JAMSOS), Indonesia’s largest retirement fund, say they want more Shariah-compliant debt in order to diversify portfolios that must hold investment- grade securities.
New Jersey-based insurance ratings firm A.M. Best has come out with a set of draft guidelines for rating Takaful firms.
The new guidelines address a number of concerns that Takaful firms have, but none more important than the limitations of the Shari’ah compliance rules on the investments available to Takaful firms and the lack of Shari’ah compliant fixed income products like Sukuk.
Standard & Poor’s (S&P) is currently reviewing credit ratings on 50 banks in the Middle East and North Africa under a revised set of criteria. Such move could result in a higher funding costs for lenders, already hit by the Arab Spring revolts.
The agency which previously drew a weak credit profile for United Arab Emirates lenders, expects more activity in debt capital markets as bank lending struggles.
In a report issued today 29 September 2011, Standard & Poor's affirmed for the 10th consecutive year its 'AAA' long-term and 'A-1+' short-term credit ratings of the Islamic Development Bank (IDB) with a Stable Outlook.
Standard & Poor's stated that the IDB's ratings are underpinned by strong shareholders' support, very high level of capital and liquidity and a good asset portfolio with preferred-creditor treatment and historically very low losses.
Dubai’s Islamic bonds jumped the most in more than a month last week after Greece’s agreement on austerity measures eased contagion concerns in Europe, prompting investors to seek higher-yielding assets.
The rate on the sheikhdom’s 6.396 percent sukuk maturing November 2014 dropped 16 basis points last week, the most since the five days ending June 3, to 4.68 percent on July 8, Bloomberg prices show.
The escalation of political tension in Bahrain is negative credit for Bahraini banks, several of which have kept their branches closed amid the volatile situation, said a report.
It reinforces fears of prolonged political and economic uncertainty, which is likely to hurt the banks’ financial condition, said an extract from the recent Moody’s Weekly Credit Outlook, published by Moody’s Investors Service, which provides clients with opinions on breaking credit market developments and trends.
Standard & Poor's Ratings Services is requesting comments on its proposal to revise its criteria for rating banks and, among them, Islamic banks.
On 6 January, S&P published a request for comment on proposed changes to its criteria for rating banks and institutional brokers. The proposed criteria aims to provide additional insight into the way it rates banks, including Islamic banks, as well as enhance ratings comparability across sectors and geography.
Fitch Ratings announced today that it has updated the Takaful Rating Methodology, a sub-sector criteria report within its Insurance group. This updated criteria report replaces prior criteria titled "Takaful Rating Methodology" dated October 2007. No substantive changes have been made from the prior version. Therefore, use of this updated criteria report is not expected to directly result in rating changes.
A more active GCC bond market could play a vital role in long-term project financing and portfolio diversification, according to Fitch Ratings.
It could also provide a broader funding access to small and medium-sized enterprises (SMEs) in the region.
"A more established debt market would offer borrowers, specifically corporates, greater flexibility and a wider range of funding sources," the report said.
Asia's relatively illiquid currencies restrict the region's Islamic finance growth potential as foreign investors have limited appetite for holding local currency assets, PricewaterhouseCoopers said on Tuesday.
Malaysia is regarded as a key Islamic finance centre and has the world's largest sukuk market, while Indonesia is seen as offering vast untapped opportunities in the sector.
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