Persian Gulf government spending will help drive what may be a record year for Islamic bond sales,Fitch Ratings said, echoing HSBC Holdings Plc (HSBA) forecasts. Sales will probably match the 2012 high, the rating company said in a note last week even amid the slowest start to issuance since 2010. Mohammed Dawood, global head of sukuk financing at HSBC, said last month that sales will rebound from a decline last year. Borrowers sold $133 million of syndicated sukuk to Jan. 19, the least since $47 million in the same period four years ago, according to data compiled by Bloomberg.
0 Comments
Muslim hosts traditionally ply a guest with food until he has gone up a couple of trouser sizes. The £200m Islamic bond planned by David Cameron would thus be no more than an amuse bouche to Muslim sovereign wealth funds with appetites measured in billions. The National Audit Office may meanwhile fret over the disproportionate cost of such a small issue. However, the PM’s sukuk – a bond paying returns from a specified asset – would have symbolic utility. It would show that the UK is comfortable with financial products that circumvent usury, as well as the kind underpinned by it. The offering could also pave the way for novel securitisations of public sector contracts. The International Islamic Liquidity Management Corp has overcome regulatory and technical obstacles in issuing its first sukuk, but it faces a fresh challenge in ensuring that the paper becomes widely traded across borders. The $490 million, three-month Islamic bond was auctioned to seven primary dealers from Asia, the Middle East abd Europe, the IILM said on Monday - a step towards creating an international market in Islamic financial instruments. Indonesia is meeting with investors in London and the Middle East ahead of a possible sukuk, or Islamic bond, issue as it grapples with a weakening currency, dwindling foreign currency reserves and a gaping current account deficit. The country set the timetable for the investor meetings even as its rupiah currency hits fresh four-year lows, with Citigroup, Deutsche Bank and Standard Chartered Bank arranging roadshows, or investor presentations, in London, Jeddah, Abu Dhabi and Dubai, a person close to the transaction told Reuters. Depressed initial public offering (IPO) activity in the Gulf Cooperation Council (GCC) continued into the second quarter (Q2) of 2013 with three new listings raising a total of only $ 48 million. This compared to two IPOs in Q1, 2013 raising an aggregate of $ 337 million, representing an 86 percent decrease in total value raised. The average offering value dropped 94 percent this quarter compared to the same quarter last year where four IPOs were witnessed raising a total of $ 1.1 billion. The total value raised in Q2, 2012 was the result of a stronger performance in the Saudi market, where out of the total four IPOs, three were Saudi-based. While the value of offerings significantly dropped this quarter, the number of offerings remained relatively stable at 3 IPOs. The Islamic capital markets and Shariah-compliant insurance have so far developed somewhat separately. Linking the two markets by using Islamic insurance for sukuk could breathe fresh vigour into both markets. One of the biggest constraints on sukuk market growth has been the product's lack of secondary liquidity. The market's mainstay investors – specialist sukuk funds and private wealth managers – tend to buy and hold, and are too small to trade in and out much. A more liquid market – which would in turn entice further investors – can only happen when bigger institutions become involved. Despite centuries of tradition and an estimated worldwide value in the billions, Takaful insurance, grounded in sharia‑compliant practices, has struggled to find traction in the UK. This year has seen several sharia‑compliant products launch in the UK. In February, Hiscox announced its backing for a niche Islamic school insurance scheme provided by insurance broker Faithsure and in May, XL Group began providing sharia-compliant products for large corporates on a global basis, underwritten by Cobalt Underwriting with financial backing provided by Capita Insurance Services. Prime Minister David Cameron is looking to Southeast Asia to boost the UK’s role in Islamic finance. It is the Bank of England he needs to convince first, say Shariah-compliant lenders based in Britain. Central bank rules require lenders to hold easy-to-sell assets as protection against short-term funding shocks. Most are off-limits for Islamic banks because they pay interest. Though wealth creation is the primary goal taught by top businessmen, social impact is considered to be a more fulfilling outcome for others. Money is not timeless, but what you do with that money can be. The light you instil in the uneducated, the medicine you provide to the ill, or the food and water you provide to the malnourished is far more enduring than the car you drive or the house you buy. Most advocates of social entrepreneurship believe that creating a business with a social impact leaves much more than just a humble footprint behind. |