WEEKLY BRIEFING
Issue 52 | Sunday, September 29, 2013
FEATURE
Analysis: GCC Sovereign sukuk more resilient in face
of rising interest rates
INSIDE THIS ISSUE
Islamic economy: We‟re not all in it together ............................... 3
By Blake Goud / IFG
PORTLAND | Sat, Sep 28
Analysis: GCC Sovereign sukuk more resilient in face of rising
The end of the U.S. Federal Reserve‟s quantitative easing program
is a nightmare for emerging market investors as yields rise in the
U.S. and global investors return home from their search for yield.
Comments made by the Fed‟s Chairman Bernanke in his annual
appearance in front of Congress sparked dramatic moves in
emerging market equity and fixed income markets as a result of
investors anticipating the scenario described in the first sentence of
this article, but what if there were a way to avoid the chaos? Sukuk
might be the solution. With a delay in the taper and a return of
investors (for now) to emerging markets in search of yield, it is not
just an academic question.
The conventional wisdom spread around is that Islamic finance is
different from conventional finance and the reaction to U.S. interest
rate policy provides a good test about whether this holds true in the
markets.
- Continued on Page 4-
interest rates ............................................................................... 4
Malaysia‟s professional waqf management must balance social
and monetary returns ................................................................... 8
UPDATE 1-Saudi Hollandi Bank plans capital-boosting sukuk sale
................................................................................................... 10
Rules, low demand hinder Malaysian Basel III sukuk ................ 11
Philippines central bank in broad Islamic finance push .............. 13
STOCKS NEWS MIDEAST-Political news may boost North Africa
markets ..................................................................................... 14
FOREX-Dollar drops broadly on possible U.S. government
shutdown... ................................................................................ 15
UPDATE 5-ICAP fined $87 mln over Libor, three former staff
charged... ................................................................................... 16
Global Sukuk and Bond Indices
110
IIBR Vs. LIBOR, (USD 6 month)
1.2
1.2
1.0
1
0.8
0.8
0.6
0.6
0.4
0.4
` 110
105
105
100
100
95
95
Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13
DJ Sukuk Index
Thomson Reuters Global Sukuk Index
0.2
Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13
6 Month USD IIBR
0.2
Sep-13
6 Month USD LIBOR
Source: Thomson Reuters EIKON - Indices Guide <Indices>
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
2
NEWS WRAP UP

Turkey will probably never join the EU - Ankara negotiator RTRS

Qatar's QEWC signs $450 mln finance deal for desalination
plant - RTRS

UAE's first REIT plans IPO on Nasdaq Dubai – sources RTRS

Bank Indonesia Amends LTV/FTV Ratio to Safeguard
Financial Stability - Indonesia Investments

Restrictions on Azerbaijani banks‟ trading activities to be
lifted due to Islamic banking - Abc.az

Abu Dhabi approves $4.3 billion development spending RTRS

Dubai's Union Properties to seek foreign ownership increase
- RTRS

No comfort from Turkish central bank as lira falls again RTRS*

Malaysia's CIMB deputy chief leaves for Khazanah Nasional RTRS

GLOBAL MARKETS-Caution rules as Washington drama
drags on - RTRS

HSBC names Samer Deghaili as Middle East equity head RTRS

Malaysia's operations of Islamic endowments could rely on
banks - RTRS

Alizz Islamic Bank appoints Head of Human Resources - Press
Release - Zawya

Dubai working on rules to avert property bubble: official RTRS

TABLE-Kuwait July M2 money supply growth slows slightly RTRS*

Dubai not in refinancing talks on $20 bln Abu Dhabi debt official- RTRS

Albaraka Turk secures murabaha loan- RTRS
*This service is only available to EIKON users, click here to register

UPDATE 2-Tunisia plans new austerity measures, risks
inflaming social tension - RTRS
CALENDAR OF EVENTS

MIDEAST WEEKAHEAD-Dubai stock investors place World
Expo bets ahead of vote - RTRS

MIDEAST DEBT-Gulf bond market braces for deals after
Fed decision - RTRS

Qatar Petroleum unit picks banks for $880 million IPO:
sources - RTRS

Turkish assets fall as relief over continued U.S. stimulus
fades - RTRS*

Malaysia launches $100 mln clean energy fund - RTRS

STOCKS NEWS MIDEAST-Gulf Navigation soars on cash
injection hopes - RTRS*

MIDEAST STOCKS-Fed jitters dampen most of Gulf; rate
cut boosts Egypt - RTRS

UPDATE 1-Dubai oil services firm NPS seeks up to $700
mln in sale -sources AKSO.OL HSBA.L - RTRS*

U.S. Fed gives Indonesia a brief respite from debt pain RTRS
WATCH LIST

Moody's assigns (P)A3 to EXIM Bank of Malaysia's sukuk
program - Moody‟s

UPDATE 1-Maybank investment banking head resigns,
expected to join CIMB - RTRS

Three quit Maybank Investment Bank - The Star

Dubai names bourse CEO as head of financial centre RTRS
Turkey's European Union Minister Egemen Bagis speaks during a news
conference in Istanbul October 12, 2011. Turkey will probably never join the
European Union because of prejudicial attitudes by the bloc's existing members,
Ankara's chief EU negotiator said, in what appeared to be the first high-level
acknowledgment that its decades-long bid might fail. REUTERS/Murad Sezer
MONDAY, SEPTEMBER 30 - OCTOBER 2
OMAN - IFSB FIS-Workshop Series
WEDNESDAY, OCTOBER 2
MALAYSIA - ISRA International Colloquium On Islamic Finance
TUESDAY, OCTOBER 8 - 9
MALAYSIA - IFSB - INCEIF Executive Forum on Takaful
MONDAY, OCTOBER 21 - 22
MALAYSIA - IFN Asia Forum 2013
WEDNESDAY, OCTOBER 23 - 24
MALAYSIA - IFSB-INCEIF Executive Forum on Takaful
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
3
COMMUNITY
Islamic economy: We’re not all in it together
By Blake Goud / IFG
PORTLAND | Sat, Sep 28
Several industry segments including finance, food, travel and lifestyle make up the Islamic economy,
but today they are not working together and this lack of interaction is the biggest factor hindering the
creation of a holistic Islamic economy. The Global Islamic Economy Summit, which will be held
November 25-26, 2013 in Dubai, UAE, will provide a forum for professionals from these varied
segments to get together to discuss ways to encourage more cooperation across the Islamic
economy.
Thomson Reuters IFG community held a Focus Session in advance of the Global Islamic Economy
Summit with Dr. Sayd Farook, the Head of Islamic Capital Markets for Thomson Reuters, and
Abdalhamid Evans, the founder of Imarat Consultants. After a brief presentation on the status of the
Global Islamic Economy, which measures in the hundreds of billion dollars today and has the potential
to transform out of niche status in coming years, they engaged with members of the community to
discuss the potential for the Islamic Economy.
The conversation focused on the lack of engagement between the different segments of the Islamic
economy which does more than deprive the Islamic economy of its potential to address all the needs
of the Muslim consumer, it also represents a huge missed opportunity for growth. For example, the
halal food manufacturer that has spent years building a supply chain that fully meets halal guidelines
and uses a certified halal logistics company until it reaches the consumer is not viewed as an
important consumer of Islamic financial products.
The Islamic finance industry is not seen as a go-to partner for halal food manufacturers to fuel their
growth and Islamic finance has not stepped forward to provide the sharia-compliant growth capital that
the industry needs to expand its profitability and propel the Islamic economy into wider visibility in
Muslim majority countries and eventually more widely into the global ethical marketplace.
The Global Islamic Economy Summit will bring together professionals from different sectors within the
Islamic economy to change this. For more information or to register, please visit the GIES website at
www.globalislamiceconomy.com
Contact details
IFG Briefing Analyst Team
Ameena Al Haddad
Ammar Radhi
Karim Arafa
Redha Al Ansari
Shaima Hasan
Yusuf Radhi
Emmy Abdul Alim (Editor)
Community Specialist Team
Blake Goud (Community
Leader)
Duaa Al Masqati
Noor Khamdan
Telephone
+973 1750 2020
Subscription and
feedback
To subscribe to the Community
& Briefings
Click Here
For
any
Feedback
or
Suggestions please contact the
IFG Analyst Team
Join us for the next Focus Session with Shelina Janmohamed, the Vice President at Ogilvy
Noor who will discuss the Muslim consumer with the IFG community on October 9, 2013.
Please RSVP on mailto:[email protected] to receive your login details to
attend this and the final two sessions before the Summit.
Facebook
Twitter
LinkedIn
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
4
FEATURE
Analysis: GCC Sovereign sukuk more resilient in face of rising interest rates
By Blake Goud / IFG
PORTLAND | Sat, Sep 28
- Continued from Page 1 –
With the fears about the „taper‟ inducing such dramatic swings in emerging markets, including those in the Gulf Cooperation C ouncil (GCC),
there is a ready-made laboratory test for how sukuk react relative to conventional bonds. And in a test, albeit with a small sample, the results
are supportive of the thesis that sukuk are more resilient in the face of rising interest rates as the Fed withdraws stimulus , at least for sovereign
sukuk.
Test parameters
This test compares the reaction in sukuk and bond markets in the GCC around changes in the Fed policy between June 2011 and S eptember
2013. Periods of both expansion and contraction of stimulus by the U.S. Federal Reserve are included and show a d ifferential impact on GCC
bonds and sukuk. The specific Federal Reserve policy changes are seen in Table 1. Both stimulative and contractionary polic ies are included
to cover possibility that fixed income markets move the same in reaction to Federal Reserve policy (in opposite directions).
Table 1: Federal Reserve policy changes used in this analysis
STIMULATIVE
Sep 21, 2011
Announcement of “Operation Twist”
Jun 20, 2012
Extension of “Operation Twist”
Aug 31, 2012
Chairman Bernanke hints at QE3
Sep 18, 2013
Federal Reserve announces no tapering of asset purchases
CONTRACTIONARY
Jun 30, 2011
End of QE2 asset purchases
May 22, 2013
Chairman Bernanke hints at Federal Reserve tapering of asset purchases
Unknown
Federal Reserve tapers asset purchases
For these events, the analysis compares the yield on sovereign and corporate bonds and sukuk immediately before the policy ch ange as well
as one day, one week, two weeks and one month after the policy change. A selection of bonds and sukuk were chosen bas ed on having
sufficient liquidity and in a way so that the issuers‟ industry and location are equally represented and the remaining maturity is comparable for
both bonds and sukuk.
The analysis compares the change in yield to maturity for 10 bonds and 8 sukuk looking at sovereign and corporate issues separately. The
bonds and sukuk included are described in Table 2.
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
5
Table 2: GCC Bonds and sukuk included in the test – 18 in total – 4 sovereign sukuk, 5 sovereign bonds, 4 corporate sukuk and 5
corporate bonds
Originator
Issuer SPV
Domicile
Issue
Size
($m)
Maturity Date
750
17/06/2014
Rating
Year
Rating
USD
2011
BBB
AA
Currency
Central Bank of Bahrain
Bahrain
TDIC
Cayman Islands
1,000
21/10/2014
USD
2009
Dubai Department of
Finance
Cayman Islands
1,250
03/11/2014
USD
n/a
RAK Capital
Cayman Islands
400
22/07/2014
USD
2009
Qatar Islamic Bank
Cayman Islands
750
07/10/2015
USD
2010
GE Capital
Bermuda
500
26/11/2014
USD
n/a
Sharjah Islamic Bank
Cayman Islands
400
25/05/2016
USD
2011
First Gulf Bank
Cayman Islands
650
02/08/2016
USD
2011
Emaar Properties
Cayman Islands
500
03/08/2016
USD
n/a
Qatar (State of)
Qatar
3,500
20/01/2015
USD
2010
AA
Abu Dhabi National
Energy Company
United Arab
Emirates
200
15/09/2014
USD
2010
A
Mumtalakat
Bahrain
750
30/06/2015
USD
2011
BBB
Dubai (Emirate of)
United Arab
Emirates
500
05/10/2015
USD
n/a
Qatar National Bank
Cayman Islands
1,500
16/11/2015
USD
2010
SABIC
Netherlands
1,000
02/11/2015
USD
Abu Dhabi Commercial
Bank
Cayman Islands
1,000
08/10/2014
USD
Emirates Airlines
United Arab
Emirates
1,000
08/06/2016
HSBC Bank Middle East
Jersey
500
21/10/2015
Industry
Instrument
Agency
Islamic
Sukuk (Ijara)
Other Financial
Islamic
Sukuk
(Hybrid)
Other Financial
Islamic
Sukuk (Ijara)
A
Other Financial
Islamic
Sukuk (Ijara)
A
Other Financial
Islamic
Sukuk
(Hybrid)
Other Financial
Islamic
Sukuk
(Wakala bil
istithmar)
BBB+
Other Financial
Islamic
Sukuk (Ijara)
A+
Other Financial
Islamic
Sukuk
(Hybrid)
Other Financial
Islamic
Sukuk (Ijara)
Sovereign
Bond
Electric Power
Note
Agency
Note
Official and
Muni
Note
A+
Other Financial
Note
2010
A+
Other Financial
Bond
2013
A+
Other Financial
Note
USD
Transportation
Note
USD
Banks
Note
Results
The results are surprising and are different for expansionary and contractionary policy changes. In contrast to expectations , sovereign bonds
are unchanged and corporate bonds saw yield increase following stimulative policy changes. Sovereign sukuk had a positive spread (yields for
sukuk rose while they fell slightly for bonds) while corporate sukuk saw an inverse reaction with yields remaining flat on sukuk while they rose
for bonds. This may indicate that market participants were anticipating stimulative changes in advance.
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
6
However, for contractionary policy (the end of QE2 and the introduction of the possibility of „tapering‟), the results were i n the expected
direction with sovereign bond yields rising more than corporate bond yields. However, the relationship between bonds and sukuk is more
interesting. Corporate bonds saw very little difference between bonds and sukuk but sovereign sukuk were resilient with yiel ds remaining flat
while sovereign bond yields rose (prices fell).
The result of changes in Federal Reserve policy changes to increase stimulus does not appear to have a spillover effect on the GCC fixed
income markets for bonds or sukuk. This could happen for many reasons, including investors shifting from bonds to equities as US policy
stimulus is anticipated to boost regional growth (through rising oil prices) and is expected to create more inflationary pressures for the GCC
through the currency peg making bonds and sukuk less desirable.
However, when the Fed shifts towards contractionary policies, the more familiar result occurs, particularly in sovereign bonds (but not sukuk).
To the extent that global fixed income investors participate in the search for yield within the GCC markets, they appear to h ave done so more
on the sovereign level and in bond markets. The GCC markets also appear not to be the first place where the „risk on‟ trade is executed
gauging the limited reaction around Federal Reserve policy changes.
For investors concerned about the impact of the taper (and more broadly, the normalization of Federal Reserve policy) on fixed income, the
sukuk markets may be a safe place to hide. The reason is likely found in the internal dynamics of the market and not in any innate difference
between bonds and sukuk. There is too much demand relative to supply, particularly for sovereign sukuk which are relatively rare as a result of
the early stage of the Islamic finance industry as a whole, but also because the region‟s hydrocarbon wealth means most count ries are running
budget surpluses. These factors all join together to keep a firm bid under the sovereign sukuk markets that will remain even if the Fed begins
tapering.
Table 3.1: Impact of Stimulative Federal Reserve policy changes on bonds and sukuk
Stimulative Policy
Sovereign
Corporate
Pre-Policy Spread
-0.46%
0.64%
Pre-Change Bond Level
3.07%
2.81%
Sovereign Bond
Corporate Bond
Sovereign Spread
Corporate Spread
+1 day
-0.06%
0.00%
0.11%
0.04%
+ 1 week
-0.03%
0.06%
0.06%
-0.02%
+2 week
0.01%
0.17%
0.35%
-0.13%
+ 1 month
-0.03%
0.11%
0.05%
-0.22%
Table 3.2: Impact of Contractionary Federal Reserve policy changes on bonds and sukuk
Contractionary Policy
Sovereign
Corporate
Pre-Policy Spread
-0.50%
0.41%
Pre-Change Bond Level
3.01%
2.86%
Sovereign Bond
Corporate Bond
Sovereign Spread
Corporate Spread
+1 day
0.08%
0.01%
0.01%
0.00%
+ 1 week
0.12%
0.00%
-0.10%
0.06%
+2 week
0.19%
0.05%
-0.28%
-0.02%
+ 1 month
0.44%
0.15%
-0.40%
0.40%
Note for Tables 3.1 and 3.2: Sovereign/corporate spread is calculated by subtracting the average bond yield from the average sukuk yield for
sovereign/corporate bonds. If it is zero, there is no difference between bonds and sukuk. If it is positive (negative) then sukuk fluctuate more
(less) after Federal Reserve policy changes. Sovereign/corporate bond is the impact of the policy on bonds.
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
7
Chart 1: Yields for the 18 selected Sovereign and Corporate bonds and sukuk Jun 2011 to Sep 2013
6%
5%
4%
3%
2%
1%
0%
Sov Sukuk
Corp Sukuk
Sov Bond
Corp Bond
Source: IFG Analysis of Thomson Reuters EIKON data
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
8
COMMENT
Malaysia’s professional waqf management must balance social and monetary returns
By Blake Goud / IFG
PORTLAND | Sat, Sep 28
Malaysia‟s review earlier this year of waqf asset management is leading to a recognition of the need for professional management and the
hope that this will allow the industry to continue growing its share of financial sector assets. Malaysia‟s effort to lead t he Islamic finance
industry once more by bringing in more professional management should be watched carefully and replicated if successful. Most of the waqf
existing globally are not professionally managed, depriving the industry of assets and awqaf of greater resources th at would come from
professional management.
However, there is more than just dollars and cents when talking about waqf and it is unclear how well these other considerati ons fit within the
banking system. It will be particularly important to watch what safeguards are put in place to ensure that the assets will be managed with an
eye to the social benefits outside of just maximizing the returns for the awqaf.
The plan is for Islamic banks to manage the country‟s RM 2 billion ($375 million) in awqaf assets, so the sharia-compliance of the management
is not in question. But there is more than just strict sharia-compliance that should be required for waqf management. The assets held by the
awqaf are social projects like hospitals, schools and mosques and their associated cash reserves.
Shifting the cash assets to Islamic banks is uncontroversial (and in some cases probably unnecessary since many are likely to already avoid
interest-based banks). However, maximizing the value of the assets themselves is likely to be where conflicts come from the profit-maximizing
behavior that Islamic banks focus on as for-profit institutions when managing assets where social (non-monetary) returns are more important.
For example, consider a waqf that owns a hospital. The profit maximizing strategy that any professional manager would undergo is to shift as
much of the hospital‟s activities towards the clients who can pay in full for the services they receive while limiting the reduced fee or free care
provided to low income clients (not all the way to zero because there are marketing benefits to showcasing charitable activities).
Yet, if a waqf-owned hospital were to focus on moving its activities away from the low-income clients, particularly under the direction of forprofit professional managers, it would likely cause consternation among the community around the hospital. The challenge for bringing
professional management to awqaf is how to do so while ensuring that the management is maximizing the total social return, not just the total
monetary returns.
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
9
SUKUK REVIEW
Sukuk Market Overview
Oman’s government may issue an
international sovereign bond and an Islamic
bond next year, its central bank chief
Hamood Sangour al-Zadjali said on Sunday.
He said it was still too early to provide
details on the size of the bonds. His
comments were in line with previous
remarks by government officials; the country
faces increasing pressure on its state
finances because of rising expenditure,
which is expected to prompt it to return to
the international debt market for the first
time since 1997. “The planned sovereign
bond is still in discussions. We could issue
next year,” Zadjali told Reuters on the
sidelines of a meeting of Arab central bank
governors in Abu Dhabi. Meanwhile, Oman
aims to develop its fledgling Islamic finance
industry, and a debut issue of sukuk by the
government would be a major step towards
that. – RTRS Sun, 29 Sept
Moody's Investors Service has assigned a
provisional A3 rating to the proposed $1
billion
multi-currency sukuk issuance
program of EXIM Sukuk Malaysia Berhad
("the Issuer"), which is established in
Malaysia. The rating outlook is stable. The
rating is subject to the receipt of final
documentation, with terms and conditions
that do not deviate materially from the
preliminary documents already reviewed by
Moody's. The (P)A3 rating assigned to the
proposed sukuk program is at the same
level as the A3 long-term foreign-currency
senior unsecured debt rating of ExportImport Bank of Malaysia Berhad (MEXIM).
The rating also reflects Moody's opinion that
the sukuk certificate holders effectively have
a claim against MEXIM, ranking pari passu
with other senior unsecured obligations. Moody‟s Fri, 27 Sept
Saudi Arabian dairy firm Almarai Co has set
guidance of 200 basis points over six-month
Libor on a planned 1.7 billion riyal ($453.2
million) Tier 1 hybrid sukuk, a banker said.
The
company
completed
two-week
roadshows last Friday and opened books on
the deal this week. The deal is expected to
be wrapped up early next week, with early
indications from investors suggesting that
demand is likely to be high, the banker said.
If completed successfully, it would be the
first corporate hybrid sukuk - a perpetual
sukuk with equity-like characteristics - in the
Gulf region. - IFR* Wed, 25 Sept
Telekom Malaysia sent out copies of an
information
memorandum
to
update
investors on its newest MTN programme
just set up this month. The investor updates
are mainly to explain the new Wakalah
concept that anchors the MYR3bn
(USD911m) Islamic CP/MTN programme.
The telco is also watching the market for an
opportune time to issue notes off the fresh
programme over the next few weeks,
although joint lead arrangers CIMB and
Maybank are ruling out any imminent deals.
Telekom, Malaysia's largest telco, typically
issues modestly sized deals of MYR200m400m on a private placement basis. Its last
tap was a MYR250m 10-year deal that
priced at 3.93% in June this year. The
bonds are rated AAA by Ram to reflect an
inherent government support for the TM
group, in which the Federal government
holds a combined 68.6% share. Assets that
will be used for the bonds include capacity
of TM's UniFi high speed broadband
services. - IFR* Tue, 24 Sept
OCK Group Bhd, which launched its
RM150 million Sukuk programme today,
intends to utilise the proceeds to execute
expansion plans for its telecommunications
network services segment. OCK Group, a
local telecommunications network services
company, plans to build and acquire more
telecommunication towers going forward.
"This plan will contribute to the group's
increasing recurring income through our
business plan to lease towers back to
telecommunications operators," OCK Group
said in a statement issued at the Sukuk
launch today. BNP Paribas was appointed
the Sukuk programme's principal adviser,
lead arranger, shariah adviser, as well as,
the joint lead manager of the 20-year tenure
sukuk with Bank Muamalat. OCK Group
Chief Executive Officer and Managing
Director Sam Oii said the company currently
owns over 60 telecommunication towers
nationwide and is eyeing to increase the
number through building new sites or
acquiring existing ones. - BER* Mon, 23
Sept
Toll road operator Konsortium Lebuhraya
Utara-Timur (Kesturi) is finalising plans to
launch a MYR2.3bn (USD725.55m) sukuk
that will fund a bond buyback and an
extension road project. Sole lead CIMB was
the main structuring adviser on the new
issue, which obtained an AA- from Marc.
The entire funding comprises MYR2.12bn of
senior debt, MYR180m in a hybrid tranche,
MYR195m of Series A redeemable
preference shares MYR45m of RPS and
MYR5m of ordinary equity. Any launch of a
new deal will depend on the completion of a
consent solicitation exercise for bondholders
of an outstanding MYR820m sukuk and of
MYR50m junior bonds due 2030. - IFR*
Mon, 23 Sept
Credit Default Swaps
140
700
120
500
100
300
100
Sep-12
80
Nov-12
Bahrain
Jan-13
Mar-13
Egypt
May-13
Dubai
Jul-13
Sep-13
Indonesia
60
Sep-12
Nov-12
Saudi
Jan-13
Qatar
Mar-13
May-13
Malaysia
Jul-13
Sep-13
Abu Dhabi
Source: Thomson Reuters EIKON CDS <REUTERSCDS>
*This service is only available to EIKON users, click here to
register
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
10
ANALYSIS
UPDATE 1-Saudi Hollandi Bank plans capital-boosting
sukuk sale
By Dinesh Nair / REUTERS
DUBAI | Thu, Sep 26



However, some have sought to boost their capital ratios in recent
months following years of high lending growth.
Saudi Hollandi eyes capital-boosting sukuk – statement
To seek shareholder approval for issue Oct. 28
Saudi banks boosting capital after strong lending growth
Saudi Hollandi Bank 1040.SE, Saudi Arabia's eighth-largest listed
bank, plans to sell a capital-boosting Islamic bond to private
investors, it said on Thursday, the latest lender in the kingdom to
bolster its reserves after strong lending growth.
The lender said its board approved plans to issue the Islamic bond
subject to approval from relevant authorities. It did not mention the
amount it plans to raise from the offer.
In a separate statement, the bank said it would hold a shareholder
meeting on Oct. 28 to seek approval for the Islamic bond offering.
Saudi banks are well capitalised compared with their Western
peers - Saudi Hollandi's capital adequacy ratio, a measure of a
bank's financial health, was 16.4 percent at the end of the second
quarter, according to its financial results.
While bank lending to the private sector grew at its weakest rate for
nine months in August, according to central bank data released on
Thursday, the level was still 15 percent higher than the same month
last year.
Saudi Hollandi sold a 1.4 billion riyals ($373.3 million) Islamic bond
in November to boost its Tier 2, or supplementary capital. The
seven-year offering, with an option to be redeemed by the issuer
after five years, was priced at 1.15 percent over the six-month Saudi
interbank offered rate.
Saudi British Bank 1060.SE, an affiliate of HSBC HSBA.L, aims to
sell an Islamic bond by year-end to strengthen its capital base,
sources told Reuters last month, and Banque Saudi Fransi 1060.SE,
part-owned by Credit Agricole CAGR.PA, completed a 1.9 billion
riyals subordinated sukuk in December.
($1 = 3.7502 Saudi riyals)
INTERNATIONAL SUKUK WEEK TOP GAINERS*
NAME
MATURITY
DATE
YIELD TO
MATURITY
LAST WEEK
YIELD
YTM
WOW%
104.50
4/23/2014
2.88
2.226
49
103.00
11/26/2014
1.27
1.476
43
102.44
103.22
8/12/2014
1.33
1.237
12
103.58
104.53
6/2/2016
2.11
1.967
11
103.26
103.99
6/17/2014
1.61
1.44
11
CURRENCY
BID
ASK
INDONESIA SY
USD
103.00
GE CAPITAL SUKUK
USD
102.00
PETRNS GLBL SUKU
USD
HBME SUKUK
USD
CBB INTL SUKUK
USD
INTERNATIONAL SUKUK WEEK TOP LOSERS*
CURRENCY
BID
ASK
MATURITY
DATE
YIELD TO
MATURITY
LAST WEEK
YIELD
YTM
WOW%
ISLAMIC DEV BANK
USD
102.25
102.75
10/27/2015
0.99
0.798
-15
RAK CAPITAL
USD
105.50
106.25
7/22/2014
0.82
1.273
-12
INDONESIA SY
USD
96.00
96.38
11/21/2018
4.89
5.462
-10
DAR ALARKAN INTL
USD
106.50
106.63
2/18/2015
5.77
6.3698
-9
IDB TRUST SERVIC
USD
102.45
103.49
9/16/2014
1.00
0.649
-8
NAME
*The top gainers and losers price ranking is driven by the yield to maturity movement on week to week basis
Source: Thomson Reuters EIKON – Sukuk Speed Guide - International Sukuk <0#INTLSUKUK>
This service is only available to EIKON users, click here to register
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
11
ANALYSIS
Rules, low demand hinder Malaysian Basel III sukuk
By Bernardo Vizcaino and Al-Zaquan Amer Hamzah / REUTERS
KUALA LUMPUR | Mon, Sep 23
local versions of Basel III will not include a loss absorption feature
allowing regulators to convert debt into equity if an issuer faces
insolvency.
Malaysia is in many ways one of the world's leading Islamic financial
markets, but regulatory issues and comfortable balance sheets are
causing it to lag behind the Gulf in one innovation: capital-boosting
sukuk.
This is particularly true in the United Arab Emirates. Because of their
large state budget surpluses and lack of broad-based income taxes,
Gulf governments do not see that much of a need to protect
taxpayers from bank crises with loss-absorption clauses.
Since last year, Gulf banks have been developing sukuk designed to
increase their capital, in order to meet new Basel III banking
standards due to be phased in around the world over the next
several years.
Malaysia's version of Basel III does require loss absorption, however,
which could raise costs for the issuer of a subordinated sukuk.
In November 2012 Abu Dhabi Islamic Bank ADIB.AD issued a hybrid
sukuk, one with equity-like characteristics, to boost its Tier 1 capital.
Dubai Islamic Bank DISB.DU sold a similar $1 billion instrument in
March 2013.
There have also been subordinated sukuk issues to raise Tier 2
capital, including a 1.4 billion riyal ($373 million) sale by Saudi
Hollandi Bank 1040.SE last November. Saudi British Bank 1060.SE,
which issued a Tier 2 sukuk in March 2012, aims to sell another one
by the end of this year.
Within Malaysia, conventional banks have been among the first
institutions in Asia to move to issue Basel III bonds; CIMB Group
Holdings CIMB.KL sold one this month, raising 750 million ringgit
($238 million) of Tier 2 capital. Public Bank PUBM.KL and RHB
Investment Bank RHBCR.UL have prepared similar bond
programmes.
But so far no Islamic bank in Malaysia has established a programme
to issue capital-boosting sukuk - partly because they see no strong
need, bankers say.
"You find that in Malaysia most of the banks are fairly comfortable,
with some banks more capitalised than others," said Badlisyah Abdul
Ghani, chief executive of CIMB Islamic Bank, the sharia-compliant
unit of southeast Asia's fifth-largest lender by assets.
"At the earliest you will probably see - perhaps next year - some
banks going to market, but most will not really be in the market
because they are well-capitalised."
LOSS ABSORPTION
Although subordinated debt is more expensive for issuers than
secured debt, strong demand among local investors in the Gulf has
allowed banks there to sell Tier 1 and Tier 2 sukuk at prices they find
favourable.
Regulation is one factor encouraging such issuance. Although
national financial regulators in the Gulf have not yet fully clarified how
they will apply Basel III standards, bankers in the region expect
Islamic banks in Malaysia are still studying how to include the
clauses, so the timing of the first Basel III sukuk remains uncertain,
said Leon Koay, head of global markets and co-head of wholesale
banking at Standard Chartered Malaysia STANB.UL.
"There are a lot of challenges of dealing with the point of nonviability. There‟s an evolution there of how they want to get the
structure right."
Even with loss absorption, Malaysia's sukuk market is deep and
liquid market enough for banks to manage any additional premium
required by investors, said CIMB's Abdul Ghani.
"Margins in Malaysia are very tight, so I don‟t think it will really
influence much in regards to cost."
But for now at least, Malaysia's Islamic banks see little urgency to
raise capital. The central bank requires all banks to have a core
equity Tier 1 capital ratio of 4.5 percent of assets, a Tier 1 capital
ratio of 6 percent and a total capital ratio of 8 percent of riskweighted assets by January 2015.
Malaysian banks in general are so well capitalised that they could
sustain a 300 percent rise in non-performing loans without Tier 1
common equity falling below 7 percent, Moody's Investors Service
estimated in a report earlier this year. Islamic banks are especially
comfortable.
In the meantime, several Islamic banks in Malaysia are exploring the
possibility of using alternative means to sukuk issues to handle their
Basel III capital needs, said a banker who declined to be named as
the matter is not yet public.
The alternatives could include the issuance of sukuk or other
financial instruments by government entities; these instruments
would be purchased by Islamic banks and, if they were governmentguaranteed or structured to have very low or even zero riskweightings, could improve the banks' capital ratios, the banker said.
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
12
SUKUK PIPELINE 2013
Issuer Name
Sukuk
Structure
Country
Subsc.
Date
Issue Size
($M)
Tenor
Arranger/Advisor
Inverfin Sukuk Berhad
Unknown
Malaysia
Announced
-
56.471
-
-
Al Madina Financial &
Investment Services
Company
Riyad
Bank
Bahrain
Telecommunications
Company
Ministry of Finance Egypt
Unknown
Oman
Announced
-
129.88
-
-
Unknown
Unknown
Saudi
Arabia
Bahrain
Announced
Rumoured
-
-
-
BNP Paribas
Musharaka
Egypt
Announced
2014
2,000
National Bank of
Egypt
Ijarah
Indonesia
Announced
2013
28.841
3 Years
to 5
Years
-
Unknown
Malaysia
Announced
-
56.471
-
-
WOM Finance
Inverfin Sukuk Berhad
Status
-
Source: Zawya. For complete list of pipeline click here
INTERNATIONAL SUKUK LEAD ARRANGERS LEAGUE TABLE 2013
BOOK RUNNER
AMOUNT ISSUED ($MILLION)
MARKET SHARE
NUMBER OF ISSUES
Deutsche Bank
2,074.6
15.4
4
HSBC Holdings PLC
1,987.5
14.8
7
Standard Chartered PLC
1,682.0
12.5
9
Citi
1,282.2
9.5
5
Emirates NBD PJSC
886.0
6.6
7
National Bank of Abu Dhabi
704.2
5.2
5
Dubai Islamic Bank Ltd
682.2
5.1
4
Riyadh Bank Ltd
500.0
3.7
1
Bank Al Bilad
500.0
3.7
1
Alinma Bank
500.0
3.7
1
RHB
434.4
3.2
3
RBS
291.7
2.2
2
Malayan Banking Bhd
200.0
1.5
1
Abu Dhabi Commercial Bank Ltd
165.6
1.2
1
Abu Dhabi Islamic Bank (ADIB)
165.6
1.2
1
Natl Comml Bank Saudi Arabia
125.0
.9
1
Kuwait Finance House
125.0
.9
1
Natixis
125.0
.9
1
Al Hilal Islamic Bank
125.0
.9
1
CIMB Group Sdn Bhd
125.0
.9
1
Credit Agricole CIB
125.0
.9
1
Barwa Bank QSC
125.0
.9
1
Masraf Al Rayan
74.6
.6
1
QInvest LLC
74.6
.6
1
Alkhair Capital Saudi Arabia
74.6
.6
1
74.6
.6
Goldman Sachs & Co
13,474.9
1
18
Source: Thomson Reuter
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
13
COUNTRY REVIEW
Philippines central bank in broad Islamic finance push
By Karen Lema and Bernardo Vizcaino / REUTERS
MANILA/SYDNEY | Fri, Sep 27
In what could be one of the most ambitious efforts to facilitate Islamic
finance in a non-Muslim country, the Philippines' central bank is
pushing several initiatives to develop the sector and encourage
financial inclusion of the Muslim minority.
The effort follows a landmark peace deal signed in October last year
which sought to end a 40-year conflict with Muslim separatists that
has killed 120,000 people, displaced two million and stunted growth.
"There is renewed interest in this and the key drivers are the peace
initiative in Mindanao as well as broad initiative of the BSP to create
a more inclusive financial system," Nestor Espenilla, deputy governor
of the Bangko Sentral ng Pilipinas (BSP) told Reuters.
"That is the arching principle."
Mindanao island, roughly the size of Portugal, accounts for around
one-quarter of the country's 97 million population and one-fifth of its
economy. But decades of neglect, corruption and violence have
impoverished parts of the island, despite being rich in natural
resources which the government wants to develop.
"We have a significant Muslim population and they are economically
active and if you want to create an inclusive financial system then
you should also have financial products that are geared to that
particular customer base."
Espenilla said the central bank has asked congress to have its
charter amended, a move that would allow it to provide shariacompliant instruments to Islamic banks, in particular interbank
lending products.
Islamic finance follows religious principles such as a ban on interest
and gambling, making interest-based transactions a major problem
for Islamic banks operating outside of the core industry hubs in the
Middle East and Southeast Asia.
"That is just once piece of a broader initiative," he said.
The BSP hopes an Islamic banking law can also help attract more
market participants as there is only one Islamic bank, Al Amanah,
which has struggled financially and is being privatised by the
Development Bank of the Philippines (DBP).
"Even if DBP is successful in privatizing it, it will just result in one
Islamic bank in the country. If you want to fully enable an Islamic
banking system, as opposed to one Islamic bank, we may have to
come up with an Islamic banking law."
The BSP would thus have to tackle an issue shared by other
countries trying to encourage Islamic finance: taxation. Certain
Islamic finance contracts, such as sukuk or Islamic bonds, can attract
double or even triple tax duties because they require multiple
transfers of title of the underlying asset.
The BSP has setup a working group that is now drafting the
proposed law which would then be presented to congress, Espenilla
said, without giving a time frame.
Such a legislative approach would be complemented by a
regulations-based approach, broadening the types of products which
could also be delivered by conventional banks, he said.
"We also need to coordinate mutual-type products, with securities
and insurance regulators as well," he added.
The BSP has sought support from industry bodies such as the
Malaysia-based Islamic Financial Services Board (IFSB), of which
the central bank is an associate member.
Such a legislative approach would be complemented by a
regulations-based approach, broadening the types of products which
could also be delivered by conventional banks, he said.
"We also need to coordinate mutual-type products, with securities
and insurance regulators as well," he added.
The BSP has sought support from industry bodies such as the
Malaysia-based Islamic Financial Services Board (IFSB), of which
the central bank is an associate member.
Last October, the IFSB signed a five-year agreement with the
Manila-based Asian Development Bank (ADB) to promote Islamic
finance,
focusing
on Indonesia,
Bangladesh, Pakistan,
the
Maldives, Afghanistan, Kazakhstan and the Philippines.
The IFSB and ADB also plan to hold a two-day Islamic finance
conference in Manila in November.
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
14
EQUITIES REVIEW
MARKETS OVERVIEW
Thomson Reuters/ IR Islamic Indices
STOCKS NEWS MIDEAST-Political news may boost
North Africa markets
By Nadia Saleem / REUTERS
DUBAI | Sun, Sep 29
Positive political news in Egypt and Tunisia may boost markets
there, but a weak global market tone and the approach of the
third-quarter earnings season may keep trading focused on
small-caps in the Gulf.
Egyptian Foreign Minister Nabil Fahmy said on Saturday that the
transitional phase of government in Egypt should end "by next
spring", replacing leaders appointed after the army ousted
elected president Mohamed Mursi in July.
170
150
130
110
90
Sep-12
Nov-12
Jan-13
MENA
Mar-13
Global
May-13
Jul-13
Sep-13
AsiaPac ex Japan
Progress in the return to democracy is generally seen as positive
by Egyptian investors, though many foreigners remain concerned
by the fact that Mursi's Muslim Brotherhood is not being included
in the process.
Last week, Cairo's benchmark index .EGX30 rose to 5,704
points, its highest level since Feb. 14. It had been testing major
chart resistance at 5,682 points, the August peak; a rise early this
week would confirm the break, pointing up to this year's high of
5,884.
Meanwhile, Tunisia's Islamist-led government agreed on
Saturday to resign after talks with secular foes to form a
caretaker administration, which will prepare for elections to
safeguard the transition to democracy.
That may boost Tunisia's market, which fell for most of the past
month because of the country's political crisis.
Global equity markets fell on Friday as the prospect of a
shutdown of U.S. government operations this week and a
possible U.S. debt default several weeks later unsettled
investors. This may moderately weigh on Gulf markets.
Dubai's bourse .DFMGI, which closed at 2,737 points on
Thursday, faces strong resistance at 2,762, the previous peak hit
on Aug. 26.
Thursday's news that Dubai will double its land transaction fee to
4 percent is not expected to dampen the real estate market or
property stocks significantly, however.
"Even if the fee is increased by the DLD, in the global context,
purchase costs will still be relatively low," property consultants
Knight Frank said in a report.
"All else equal, we think that the rise in the transfer fee will have
little impact on the rate at which residential prices are currently
growing."
MARKET SNAPSHOT
MEA
Value
WoW
MTD
YTD
TASI
7981
-0.54%
2.76%
17.35%
DFMGI
2765
3.11%
9.58%
70.40%
ADI
3854
1.17%
3.19%
46.48%
KWSE
7788
-0.74%
2.03%
31.23%
XU100
74772
-3.97%
12.62%
-4.39%
EGX30
5704
2.10%
8.28%
4.42%
MSI
6674
1.40%
-0.27%
15.85%
QSI
9626
-1.64%
0.07%
15.15%
Value
WoW
MTD
YTD
FTSE 100
6513
-1.27%
1.56%
10.43%
DAX
8662
-0.16%
6.89%
13.78%
STOXX 50
1105
-0.27%
7.27%
10.75%
DJIA
15258
-1.25%
3.02%
16.44%
S&P 500
1692
-1.06%
3.60%
18.62%
TOPIX
1153
-0.14%
9.99%
41.67%
HANG
SENG
74772
-3.97%
12.62%
-4.39%
NIKKEI
14760
0.12%
10.24%
41.99%
Global
Source: Thomson Reuters EIKON - Indices Guide <Indices>
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
15
FOREIGN EXCHANGE REVIEW
FOREX-Dollar drops broadly
government shutdown
on
possible
U.S.
By Julie Haviv / REUTERS
NEW YORK | Fri, Sep 27
The dollar dropped across the board on Friday, hitting a 7-1/2-month
trough against the safe-haven Swiss franc, dented by the prospect
of a U.S. government shutdown next week and a lack of clarity over
when the Federal Reserve will scale back stimulus.
The U.S. government braced for a possible partial shutdown of
operations on Oct. 1 as Congress struggled to pass an emergency
spending bill that Republicans want to use to achieve Tea Partybacked goals, such as defunding the new healthcare reform law.
Congress also faces the hard task of raising the limit on federal
borrowing authority. Without a debt limit increase by Oct. 17,
Treasury Secretary Jack Lew has warned, the United States
government would have a difficult time operating and paying
creditors.
An employee counts U.S. dollar bills before changing it to Philippine Pesos inside a
money changer in Manila September 19, 2013. The dollar dropped across the board
on Friday, hitting a 7-1/2-month trough against the safe-haven Swiss franc, dented
by the prospect of a U.S. government shutdown next week and a lack of clarity over
when the Federal Reserve will scale back stimulus. REUTERS/Romeo Ranoco
The more immediate focus was the looming U.S budget deadline.
"As this deadline approaches, investors are stepping up their sale of
dollars on the growing concern that a government shutdown will
undermine the quality of U.S. assets and lead to a retrenchment in
U.S. growth," said Kathy Lien, managing director at BK Asset
Management in New York.
The dollar index, which tracks the greenback against a basket of six
major currencies .DXY, was last down 0.3 percent to 80.284, not far
from a seven-month low of 80.060 struck after the Fed last week
decided to maintain its bond-buying program at $85 billion a month.
On the week the index dropped about 0.2 percent, its third straight
weekly loss. For September it is down around 2.2 percent.
Currency speculators cut their bets in favor of the U.S. dollar to the
lowest net long in seven months in the latest week, according to
data from the Commodity Futures Trading Commission released on
Friday.
The dollar fell to 0.9018 Swiss franc, its lowest since early February,
with the franc also boosted by solid Swiss sentiment data. It was last
down 0.5 percent at 0.9058.
"Month-end rebalancing and hedging activity are having enough
impact to move the dollar in an environment of limited volume," said
Sebastien Galy, foreign exchange strategist at Societe Generale in
New York.
Against the dollar, the euro rose 0.2 percent to $1.3518. The euro
dominates the composition of the dollar index.
"Some profit-taking in U.S. equities was likely behind the run-up on
euro/dollar in the morning and this pressure is fading as algorithms
are not finding enough momentum to continue the break-out in
euro/dollar," Galy said. "Next week's U.S. nonfarm payrolls report
will likely lead the dance for 10-year yields."
"Downward pressures may still initially support euro/dollar, before
the market realizes it is priced for perfection, whereas signs of
deflation for example in Spain express a different reality," he said.
Sterling rose to $1.6137 against the dollar, a one-week high, after
Bank of England Governor Mark Carney was quoted as saying he
saw no need for more bond-buying by the central bank given signs
of recovery in the British economy.
CLOUDY FED OUTLOOK
Beyond the budget impasse and month- and quarter-end flows,
investors are focused on the Fed's next meetings in October and
December, with some expecting the U.S. central bank to hold off
on reining in stimulus until early 2014 to make sure the U.S.
recovery is firmly on track.
"While we maintain a positive medium-term outlook for the dollar,
signs of more definitive upside momentum for the greenback will
have to wait until Washington has overcome its budget hurdles
and until U.S. economic data suggests that the U.S. economy is
sufficiently self-sustaining for quantitative easing to be reduced,"
said Jane Foley, senior currency strategist at Rabobank in
London.
The dollar fell to a one-week low against the yen after Japanese
Finance Minister Taro Aso said he was not thinking of lowering the
effective corporate tax rate now. The remarks surprised investors
who had positioned for a weaker yen on expectations of more
fiscal stimulus to prop up the economy.
The issue of whether Japan will lower the effective corporate tax
rate has been weighing on the yen, which has slid this year on the
back of Japanese Prime Minister Shinzo Abe's push to reflate the
economy through steps such as aggressive monetary stimulus
and pro-growth structural reforms.
"The government will likely implement some form of fiscal stimulus
but clearly it won't include a corporate tax rate cut immediately,"
said Derek Halpenny, European head of global market research at
Bank of Tokyo Mitsubishi.
The dollar fell as low as 98.07 yen and last traded down 0.7
percent at 98.24 yen. On the week the dollar dropped about 1.2
percent, its second straight weekly loss, according to Reuters
data.
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
16
INTERBANK MARKETS REVIEW
Thomson Reuters Islamic Interbank Benchmark Rate (IIBR)
The IIBR overnight rate dropped slightly on Sunday to 0.177 from 0.178 while the one week rate increased to 0.236 from 0.248. The one month
rate increased to 0.369 from 0.364, the three months rate to 0.550 from 0.516 and the six months rate to 0.693 from 0.688. Th e one year rate
decreased to 1.001 from 1.016 last week.
UPDATE 5-ICAP fined $87 mln over Libor, three former
staff charged
By Kirstin Ridley, Clare Hutchison and Aruna Viswanatha/ REUTERS
LONDON/WASHINGTON | Wed, Sep 25
U.S. and British authorities on Wednesday fined ICAP IAP.L, the
world's biggest interdealer broker, $87 million and filed criminal
charges against three former employees over the Libor interest rate
rigging scandal.
The scandal, which has laid bare failings by regulators and bank
bosses over several years, has triggered a sprawling global
investigation that has already seen three banks fined a total of $2.6
billion, four other people charged, scores of institutions and traders
interrogated and a spate of lawsuits launched.
The U.S. Department of Justice charged former ICAP derivatives
broker Darrell Read, his supervisor Daniel Wilkinson, and cash
broker Colin Goodman with conspiracy to commit wire fraud and two
counts of wire fraud - offences carrying sentences of up to 30 years.
Simultaneously, the U.S. Commodity Futures Trading Commission
and Britain's Financial Conduct Authority ordered ICAP's ICAP
Europe Ltd unit to pay $65 million and 14 million pounds ($22
million), respectively.
"These three men are accused of repeatedly and deliberately
spreading false information to banks and investors around the world
in order to fraudulently move the market and help their client fleece
his counterparties," said Acting Assistant Attorney General Mythili
Raman of the Justice Department's criminal division.
ICAP called its former staff "rotten apples" and said it would improve
systems to ensure compliance with regulations.
A central cog in the global financial system, the London interbank
offered rate (Libor) is used as a benchmark against which hundreds
of trillions of dollars worth of products, from complex derivatives to
personal mortgages, are priced worldwide.
Based on a survey of what banks would charge each other for loans,
traders colluded on answers that could nudge the reported rates by
amounts that were tiny but translated into big profits.
Even as ICAP settled the civil probes, the firm could still face criminal
charges from the Justice Department, which is continuing its
investigation.
Multiple other banks and individuals also face potential prosecution
for Libor manipulation. "We have a lot more to look at here," Raman
said in an interview with Reuters.
"LORD LIBOR"
ICAP, run by London businessman and former Conservative Party
treasurer Michael Spencer, is the first interdealer broker sanctioned
in the affair. Firms such as ICAP match buyers and sellers of bonds,
currencies and derivative financial instruments, including swaps. (Full
Story)
Yield Curve: IIBR* and LIBOR
Yield Curve: Murabaha and Wakala Rates
2
3
IIBR
LIBOR
1.5
1.00
0.86
1
0.5
0.18
0
0.109
ON
0.24
0.139
SW
Wakala
2.5
0.37
0.44
0.55
1.5
0.69
1M
2M
0.248
3M
0.750 0.900
1
0.626
0.180 0.217
Murabaha
2
0.367
0.000
6M
9M
0.500
0.250
0.5
0.050
0
1Y
ON
1.000
1.000 0.950
0.350
0.650
0.250
0.100
SW
1M
2M
1.150
0.550
0.450
3M
6M
9M
1Y
*The Islamic Interbank Benchmark Rate (IIBR) is published at 11 am Makkah time (GMT +3) Sunday
.
#
The London Interbank Offered Rate (LIBOR) is published at 11 am GMT Friday.
Source: Thomson Reuters EIKON <ISL/MONEY>
Thomson Reuters Islamic Interbank Benchmark Rate- IIBR <IIBRFIX>
ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
17
ISLAMIC MARKET INDICATORS
Global Islamic Indices
TR/IdealRatings Islamic
GCC Index
TR/IdealRatings Islamic
MENA Index
TR/IdealRatings Islamic
Global Index
DJ Islamic Market World
DJ Islamic Sustainability
MSCI World Daily PR
S&P500 Shariah
FTSE4GDB Global
Emerging Markets Islamic
Domestic
DJ Islamic GCC
DJ Islamic Global Finance
& Takaful
Global Indices
Last
Net Chng
15.41%
TR GCC
195
0.34
2.50%
15.24%
TR MENA
132
4.63%
5.06%
10.79%
13.23%
158
15258
-0.32%
-0.73%
-0.88%
-0.55%
5.49%
4.39%
3.82%
5.78%
12.22%
17.80%
17.36%
15.24%
1524
1555
1692
6513
0.96
0.20
-0.64%
-0.32%
4.34%
3.01%
-4.47%
18.14%
TR Global
DJ INDU AVERAGE
DJ Sustainability World
80 Price Index
Msci World Price Return
S&P 500
FTSE100
DJIM World Emerging
Markets
Dow Jones GCC
-1.60
-0.83%
3.93%
16.81%
Last
Net Chng
WoW Chng
MTD Chng
YTD Chng
142
-0.25
0.09%
2.21%
127
-0.26
0.29%
180
3395
-0.31
0.00
-0.66%
-0.49%
2908
1105
1472
6397
4.92
-3.62
-5.14
0.00
970
1955
1226
Thomson Reuters /IR
Islamic Indices
Last
Net Chng
WoW Chng
MTD Chng
YTD Chng
Malaysia
UAE
Indonesia
Kuwait
Qatar
Bahrain
Turkey
Oman
Egypt
201
157
260
100
198
58
285
170
124
-0.20
0.62
1.41
-1.21
0.59
0.00
-0.32
-0.04
0.90
-0.72%
1.49%
-4.04%
-0.36%
-1.12%
0.90%
0.40%
1.45%
0.66%
2.73%
9.84%
4.12%
1.29%
0.44%
6.96%
10.64%
0.59%
6.92%
7.50%
60.66%
10.87%
6.29%
4.88%
8.51%
11.13%
20.14%
0.35%
WoW Chng MTD Chng
YTD Chng
-0.19%
1.98%
22.60%
0.06
0.26%
1.92%
21.29%
-0.26
-70.06
-0.60%
-1.25%
5.93%
3.02%
12.39%
16.44%
0.00
-1.75
-6.92
-52.93
-0.96%
-0.53%
-1.06%
-1.27%
3.30%
5.58%
3.60%
1.56%
7.53%
16.17%
18.62%
10.43%
2065
1767
-1.00
0.25
-0.39%
-0.29%
6.20%
2.64%
-3.91%
17.58%
DJ Global Financials
206
-0.04
-1.10%
6.72%
13.83%
Thomson Reuters
National Indices
Last
Net Chng
Malaysia
UAE
Indonesia
Kuwait
Qatar
Bahrain
Turkey
Oman
Egypt
440
258
447
126
219
114
1698
119
157
1.00
1.33
1.95
-1.37
1.14
0.00
-10.72
0.13
0.95
WoW Chng MTD Chng
-0.93%
1.15%
-4.16%
-0.25%
-1.52%
1.49%
-2.11%
1.26%
2.32%
3.29%
3.39%
6.38%
3.21%
0.10%
3.17%
10.58%
0.08%
7.13%
YTD Chng
9.65%
51.04%
2.02%
4.57%
16.23%
19.54%
0.94%
14.78%
2.29%
Top Performing Sharia-based Companies
DB ISL INS&REI/d
AMAN.DU
ISLAMIC ARAB I/d
SALAMA.DU
GULF FIN HOUSE
GFHB.BH
TAKAFUL-EM/d
TKFE.DU
Last
1.13
0.77
0.13
0.677
Country
United Arab Emirates
United Arab Emirates
Bahrain
United Arab Emirates
Sector
Financials
Financials
Financials
Financials
5D Chng
14.29%
12.11%
12.00%
10.05%
YTD
20.04%
22.75%
16.67%
7.05%
Bottom Performing Sharia-based Companies
1ST PAK MOD
PAKM.KA
BANK ISLAMI
BIPL.KA
OSOUL INVST CO
OSUL.KW
AL SAFAT ENERGY
SENE.KW
Last
1.39
6.1
96
51
Country
Pakistan
Pakistan
Kuwait
Kuwait
Sector
Financials
Financials
Financials
Energy
5D Chng
-13.58%
-10.10%
-8.00%
-7.14%
YTD
-25.13%
-39.35%
9.52%
4.00%
Volume
11,000
1,621,500
200
4,688,150
Top Performing Sharia-compliant Companies
CRM COMPANY
ALCRM.PA
ASIA GROWTH CPTL
6993.T
ATLANTIC COAL
ATCP.L
UNITED BINTANG
UBIN.KL
Last
0.5
78
0.22
0.58
Country
France
Japan
United Kingdom
Malaysia
Sector
Cyclical Consumer Goods & Services
Industrials
Energy
Industrials
5D Chng
117.39%
95.00%
77.78%
75.76%
YTD
0.00%
105.26%
-5.88%
190.00%
Volume
80,261
12,366,500
208,909,741
4,000
Bottom Performing Sharia-compliant Companies
CHINA INDS
CIWT.PK
DBA TELECOM/d
3335.HK
CHINA SKY ONE ML
CSKI.PK
PRECISE BIOMETR
PREC.ST
Last
0.17
2.03
0.12
2.41
Country
China
Hong Kong
China
Sweden
Sector
Industrials
Industrials
Healthcare
Technology
5D Chng
-48.48%
-46.01%
-33.33%
-30.35%
YTD
-43.33%
-59.88%
-38.68%
273.70%
Volume
2,500
5,725
39,679,419
Commodities
CRUDE APR3
NGAS APR3
GOLD APR3
CRUDE APR3
SILVER MAY3
Currencies
Euro
Japanese Yen
GB Pound
Swiss Franc
Australian Dollar
Indian Rupees
Malaysian Ringgit
Bonds (Top Benchmarks)
US5Y
US10Y
EU5Y
EU10Y
ES5Y
IT5Y
GR10Y
PT5Y
Last
102.81
3.587
1336.3
21.77
102.81
Last Bid
1.3521
98.24
1.6137
0.906
0.9315
62.5
3.226
1.3521
Bid Yield
1.4042
2.6281
0.808
1.78
3.241
3.464
9.952
6.355
Net Chng
-0.16
0.62
1.14
0.30
-0.16
Net Chng
0.00
-0.73
0.00
-0.00
-0.00
0.43
0.01
0.00
Net Chng
0.00
0.00
0.01
0.00
0.02
0.00
0.01
-0.06
WoW Chng
-1.78%
-2.71%
0.29%
-0.72%
-1.78%
WoW Chng
-0.01%
-1.07%
0.83%
-0.45%
-0.83%
0.43%
1.96%
-0.01%
WoW Chng
-5.25%
-3.94%
-14.04%
-8.53%
3.91%
5.45%
-3.09%
-5.09%
MTD Chng
-4.50%
0.17%
-4.28%
-7.40%
-4.50%
MTD Chng
2.28%
0.09%
4.06%
-2.56%
4.71%
-4.87%
-1.80%
2.28%
MTD Chng
-14.69%
-5.77%
-1.70%
-4.30%
-7.66%
5.48%
-3.47%
-0.09%
Volume
4,726,244
15,648,119
7,510
154,653
YTD Chng
11.97%
7.04%
-20.38%
-28.32%
11.97%
YTD Chng
2.48%
13.26%
-0.70%
-1.04%
-10.37%
13.66%
5.53%
2.48%
YTD Chng
93.68%
49.58%
183.51%
36.40%
-20.17%
3.25%
-16.52%
22.85%
A service of Thomson Reuters and Zawya Islamic Finance Gateway
The contents of this briefing are independently compiled by the Thomson Reuters and Zawya Islamic Finance Gateway Service, a business of the Global Growth and Operations Division.
While material is drawn from Reuters News and other sources, Reuters has not participated in the selection of these articles.
The production of the briefing is supported by the Bahrain Economic Development Board (EDB) and Tamkeen (Labour Fund) as part of their initiatives to promote Islamic Finance in
Bahrain.
Privacy Statement: To find out more about how we may collect, use and share your personal information please read our
Privacy statement.
You may instruct us to remove you from the Thomson Reuters Zawya Islamic Finance Gateway by clicking here.
Thomson Reuters, 3 Times Square, New York, NY 10036, USA