Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Bond issuers turn to Malaysia, Asia  Join our daily free Newsletter

MENAFN - Arab News - 10/10/2011

No. of Ratings : 0
Add to Mixx!


(MENAFN - Arab News) Today, Kuveyt Turk Participation Bank (KTPB), which is majority owned by Kuwait Finance House, one of the largest Islamic banks in the world, launches its roadshow for its proposed 5-year 350 million Sukuk Al-Ijara issuance. The fact that the roadshow is starting in Kuala Lumpur, Malaysia is revealing in that issuers from the Middle East, largely from the Gulf Cooperation Council (GCC) countries and now Turkey for the first time, are turning to investors in Malaysia and Asia to raise their funding requirements.

At the same time, Abu Dhabi National Energy Company (Taqa) is in the process of launching a RM3.5 billion sukuk program in Malaysia to diversify funding sources. The company confirmed the issuance program in a statement to the Abu Dhabi Securities Exchange, and stressed that once regulatory approval is obtained from the Securities Commission of Malaysia, it aims to issue a first tranche under the program "quickly if an when market conditions are optimal".

These two issuances follow the offering in August 2011 of the RM750 million (254 million) Sukuk Wakala bi Istithmar issued by Kuwait-based Gulf Investment Corporation (GIC) under its existing 20-year RM3.5 billion (1.18 billion) medium term notes program. GIC, whose shareholders include the governments of the six GCC states, namely, Kuwait, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain and Oman, and whose mandate is to promote private enterprise and support economic growth in the GCC region, raised the RM750 million in the Malaysian market through a 5-year sukuk issuance which has a profit payment of 4.9 percent to be paid twice a year.

Other foreign issuers that have originated sukuk in Malaysia include the World Bank and its private sector funding arm, the International Finance Corporation (IFC); the 100 million Sukuk Al-Ijara issued by Japan's Nomura Holdings; the RM100 million Sukuk Al-Ijarah issued by Islamic Development Bank; and the RM500 million 10-year sukuk issued by the National Bank of Abu Dhabi.

However, the biggest breakthrough potentially came in 2010 when Saudi Arabia's Al-Rajhi Bank, the largest Islamic bank in the world in terms of balance sheet, collaborated with Cagamas Berhad, the National Mortgage Corporation of Malaysia and leading securitization house, to develop and launch the Sukuk al-Amanah Li Al-Istithmar (Sukuk ALIm), which was the underlying structure for Cagamas's RM5 billion Islamic Commercial Paper (ICP) and Islamic Medium Term Note (IMTN) program. This "first-of-its-kind" and "innovative" structure was sold to investors in Saudi Arabia and is a manifestation of Al-Rajhi's new-found strategy of bridging the gap and facilitating cross-border activity in the Islamic capital market between Malaysia and the Middle East.

For Kuveyt Turk Participation Bank (KTPB) this will be its second sukuk issuance subject to market conditions and the right pricing. Last year the Bank issued a 3-year 100 million Wakala Sukuk in the GCC market. This one, according to Ufuk Uyan, CEO of KTPB, will be a five-year offering which would make it the first 5-year sukuk issued by a Turkish corporate to date.

The roadshow will start in Malaysia on Monday and move to other Asian markets, and then proceed to the Middle East and Europe by Oct. 18. KTPB has already appointed HSBC, Liquidity Management House and Standard Chartered Bank as lead arrangers for the issuance, which will be a US dollar denominated sukuk offering but subject to market conditions.

International rating agency Fitch Ratings has assigned the proposed KTPB second sukuk an expected rating of "BBB-". The expected rating, said Fitch, is in line with Kuveyt Turk's long-term foreign currency issuer default rating (IDR) of "BBB-". The final rating is contingent upon receipt of final documents conforming to information already received by Fitch.

The sukuk certificates will be issued by a special purpose company, KT Sukuk Varlik Kiralama A.S on behalf of KTPB, and use the proceeds to purchase from KTPB a portfolio of real estate Ijara (leasing) assets, non-real estate Ijara assets and Murabaha receivables. In accordance with the lease agreement (in relation to the real estate Ijara assets), Kuveyt Turk will lease-back the real estate Ijara assets and will pay rent to the issuer who will in turn pay the profit distribution to the certificate holders.

Kuveyt Turk, said Fitch, is ultimately liable for the due and punctual payment of all sums payable to the certificate holders. In accordance with the purchase undertaking agreement, Kuveyt Turk undertakes to purchase the portfolio assets from the issuer against the exercise price at maturity, expected to be in 2016, or earlier if a dissolution event (which includes an event of default or breach of other obligations on the sukuk by Kuveyt Turk) occurs. Kuveyt Turk's payment obligations under this transaction will rank at least equally with the claims of all of its other unsecured and unsubordinated creditors.

At the same time, the planned RM3.4 billion sukuk program by Abu Dhabi National Energy Company (Taqa) is part of the utility's efforts to diversify its sources of funding and will be the first Malaysian ringgit issuance by a UAE issuer. International credit rating agency, Moody's Investors Service, has assigned a provisional A3 rating to Taqa's proposed RM3.5 billion sukuk program.

In its rating rationale, Moody's stressed that the Sukuk Murabahah instruments to be issued pursuant to the program will rank pari passu with all other unsecured and unsubordinated obligations of Taqa and therefore carry the same rating as Taqa's A3 long-term issuer rating. "The purpose of establishing the Sukuk Program by TAQA is to diversify its investor base, with management's intention of using proceeds for general corporate purposes. Moody's understands that the interest and principal Malaysian ringgit currency exposure will be fully hedged. The terms and conditions of the Sukuk Program are based on Malaysian law," said Moody's.

GCC businessmen such as Hisham Al-Razzuqi, chief executive officer of GIC, anticipate more issuers from the GCC region following suit in tapping into non-traditional sources such as Malaysia and East Asia to obtain long-term funds, especially in the aftermath of the so-called "Arab Spring".

These developments are also a major boost for the Malaysia International Islamic Financial Centre (MIFC) Initiative, which inter alia seeks to promote Malaysia as the centre for sukuk origination and listing.

The latest statistics underpin the strong support which the Malaysian government and the Securities Commission Malaysia have afforded the development of the Islamic Capital Market (ICM) in the country over the last few years. The Malaysian ICM totaled RM1.07 trillion at the end of 2010, slightly lower than the conventional capital market which reached RM1.19 trillion for the same period. The ICM comprised RM756.1 billion in Islamic equities (mainly mutual funds); RM294 billion in sukuk issuances; and RM24 billion in Islamic unit trusts.

The country's Capital Market Master Plan 2 (CMP2), which was launched by the Prime Minister Mohd Najib in April 2011, is also aimed at internationalizing the Malaysian financial services industry, and therefore the capital market, especially domestic companies venturing cross-border to diversify investments and risks and to achieve greater returns. "Our task now is to shift the focus of Islamic finance from serving domestic needs towards tapping the tremendous growth opportunities from intermediating international investments and corporate transactions," said Premier Najib at the launch.

Indeed, the internationalization of the capital market is a necessary pre-requisite to strengthening Malaysia's Islamic Capital Market hub - set to increase almost threefold from RM1.1 trillion in 2010 to RM2.9 trillion in 2020.


  MENA News Headlines
Apr 24 2014Qatar- HH Sheikha Moza Meets Mayor of Kobe Visits RIKEN Research Institution ,Qatar News Agency
(MENAFN - Qatar News Agency) Kobe April 24 - Her Highness Sheikha Moza bint Nasser Chairperson of Qatar Foundation for Education Science and Community Development (QF) today held a meeting with the ...

Apr 24 2014Qatar- Sidra-BMC Event Boosts Biomedical Research Publishing ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - A symposium organised jointly by Sidra Medical Research Centre and BioMed Central (BMC) mulled trends in research and on open access publishing here ...

Apr 24 2014Qatar- Mannai Corp Q1 Net Profit up 73% to QR 150.1 Million ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Exchange listed Mannai Corporation (QE: MCCS) net profit is up 73% to QR 150.1 Million for the first quarter of fiscal year 2014 ending March 31 ...

Apr 24 2014Bahraini firms forecasted to grow 10 pct ,MENAFN
(MENAFN) In a report based on a study of over 650 companies across GCC, Kuwait Financial Centre (Markaz) forecasts a growth of the Bahraini companies' earnings by 10 percent in 2014, Gulf Daily News ...

Apr 24 2014Israeli Army Storms Deir Samit Village West of Hebron ,Qatar News Agency
(MENAFN - Qatar News Agency) bron April 24 - Israeli army forces stormed at dawn Thursday Deir Samit village southwest of Hebron city in the West Bank. The Israeli forces conducted raid and search ...

Apr 24 2014Qatar Airways to add more seats on Doha-Vienna route ,MENAFN
(MENAFN) Qatar Airways plans to offer more 1.700 seats on its Doha-Vienna route beginning from September 2014, according to Gulf News. The company aims to expand the growing passenger demand from ...

Apr 24 2014Qatar- QFC Authority Five-a-Side Football Tournament Kicks Off ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Financial Centre (QFC) Authority's first Five-a-side Football Tournament is displaying dribbling skills of executives from Doha's financial ...

Apr 24 2014Georgian Justice Minister Leaves Doha ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - HE Minister of Justice of Georgia Tia Tsulukiana left Doha on Thursday morning wrapping up a two-day official visit to the country. An agreement on ...

Apr 24 2014Egyptian Premier Off to Chad ,Qatar News Agency
(MENAFN - Qatar News Agency) Cairo April 24 - Egyptian Prime Minister Ibrahim Mehlib left cairo on Thursday for Chad the first leg of a three-day two-state trip that will also take him to Tanzania ...

Apr 24 2014Qatar Stock Exchange Down 0.05% ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - The Qatar Exchange ended in the red area when trading closed Thursday at 12954.93 points (0.05%) down 6.63 points from the previous closing of 12961.56 ...

Apr 24 2014Israeli Tanks Enter Gaza Border area ,Qatar News Agency
(MENAFN - Qatar News Agency) Gaza April 24 - Six Israeli military tanks on Thursday entered a border area in the southern Gaza Strip witnesses said. The tanks crossed into Gaza in an area called ...

Apr 24 2014President Salva Kiir Relieves his Chief of the General Staff ,Qatar News Agency
(MENAFN - Qatar News Agency) Juba April 24 -South Sudanese President Salva Kiir relieved Chief of the General Staff of south sudan army James Hoth Mai. This came in a presidential decree aired ...

Apr 24 2014Afghan Guard Shoots Dead 3 Foreigners in Hospital ,Qatar News Agency
(MENAFN - Qatar News Agency) Kabul April 24 - Three foreigners including a doctor were shot dead and their colleague wounded when a guard of a private Cure Hospital opened fire on them in the ...

Apr 24 2014Uruguay Public Health Minister Meets HE Qatari Ambassador ,Qatar News Agency
(MENAFN - Qatar News Agency) Montevideo April 24 -Minister of Public Health in Uruguay Maria Susana Mu?iz met here on Thursday with HE qatari ambassador to the republic of Uruguay mohamed hassan ...

Apr 24 2014King bids to reassure Saudis as MERS deaths hit 85 ,AFP
(MENAFN - AFP) King Abdullah was in the Saudi commercial hub of Jeddah on Thursday in a bid to reassure a worried public as the death toll from the MERS virus hit 85. The Red Sea city has seen a ...

Apr 24 2014QBA strengthens economic ties with Kenya ,MENAFN
(MENAFN) Members of the elite Qatar Businessmen's Association (QBA) stated their willingness to cooperate with their Kenyan peers, strengthening economic ties between Qatar and Kenya, The Peninsula ...

Apr 24 2014Australian Federal Parliament Deputy Speaker Meets HE Qatari Ambassador ,Qatar News Agency
(MENAFN - Qatar News Agency) Canberra April 24 - Australian Federal Parliament Deputy Speaker Bruce Scott met here Thursday with HE Qatar's Ambassador to Australia Yousef bin Ali Al ...

Apr 24 2014Russian Lebanese Foreign Ministers to Discuss Situation ,Qatar News Agency
(MENAFN - Qatar News Agency) scow April 24 - Russian Foreign Minister Sergei Lavrov and his Lebanese counterpart Gebran Bassil will discuss bilateral relations at a meeting in Moscow on Thursday as ...

Apr 24 2014Omani non-oil exports to enter African markets ,MENAFN
(MENAFN) A senior official at the Oman Chamber of Commerce and Industry (OCCI) said that the Sultanate is seeking expansion in new African markets, in a time it is looking forward to reduce its ...

Apr 24 2014US Secretary of State Meets Egyptian Intelligence Chief ,Qatar News Agency
(MENAFN - Qatar News Agency) shington April 24 - US Secretary of State John Kerry has met with the Egyptian Intelligence Chief Major General Mohammed Ahmed Fareed al-Tohami who is currently ...


Click to Apply



Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  

Middle East North Africa - Financial Network

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details


Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks

Saudi Arabia 

Investment Game
Economic Calendar
Financial Glossary

Portfolio Tracker


Financial Calculators

RSS Feeds [XML]

Corporate Monitor


Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters

© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help