Professional Documents
Culture Documents
950
RED (All Cap)
The increasing sophistication of
925 Sukuk
900
0.52%
Alongside the record growth and Islamic versus economic
exceptional investor demand of the This evolution can be broadly separated
870.08 booming Sukuk market lies a parallel into two categories. Nick Stadtmiller, the
875 story: the ongoing development and head of fixed income research at Emirates
874.69
increasing complexity of Sukuk NBD, explains that: When you refer to a
850 structures. Yet is this a blessing or a complicated structure, there are two things
W T F S S M T curse for the industry are we moving you could mean. One is the structuring
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in the right direction, or is our appetite of the cash flows is it a Murabahah, a
for sophistication hampering the true Wakalah, an Ijarah the Islamic side. The
Volume 9 Issue 44
course of Shariah compliant instruments? other is the actual economic aspect of the
IFN Rapids .........................................................2 This week we explore the innovations transaction: in other words, what are the
Islamic Finance news .........................................6 taking place at the cutting edge of the risks and what are the pay-os.
IFN Reports: A possible catalyst; Dana Gas fails Sukuk sector, and what this means for the
to repay debt on time reaches standstill with industry. Issuer advantage
creditors; US$1.73 billion Sukuk to buy planes for Islamic structures for Sukuk remain the
ailing national carrier Malaysia Airline System.....10 Sukuk is undeniably the most popular fundamental building blocks, but the
IFN Correspondents: Indonesia .........................12
investment instrument in the Islamic industry is seeing a growing number of
capital market, bringing a unique value innovative transactions that develop and
Insider: Al Hilal Bank strengthens investment
proposition to both investors and issuers expand these structures in order to create
banking capabilities....................................................13
and promoting a diverse and flexible means new transactions based on the needs of
Case study: of harnessing the liquidity and strength of the company. As demand continues to far
TH Plantations US$65.23 million Sukuk the industry. For investors, Sukuk oer the outpace supply, issuers are able to leverage
Murabahah .........................................................14 advantage of portfolio diversification in this in order to create structures that meet
Features: the form of new asset classes, while issuers their own specific requirements.
Australia a new Islamic finance hub? ............15 benefit from increased liquidity along
Examining Malaysias Shariah governance with compliant and accessible fundraising Anzal Mohammed, a partner and the head
frameworks provisions on Shariah advisors .....16 through tapping into the growing demand of the Sukuk practice at Allen & Overy
for Shariah compliant investment products. continued on page 3
Islamic finance: A growth strategy model .........19
www.islamicfinancenews.com
IFN RAPIDS
www.islamicfinancetraining.com
enquiry@redmoneytraining.com
Disclaimer: Islamic Finance news invites leading practitioners and academics to contribute short reports each week. Whilst
we have used our best endeavors and eorts to ensure the accuracy of the contents we do not hold out or represent that the
respective opinions are accurate and therefore shall not be held responsible for any inaccuracies. Contents and copyright
remain with REDmoney.
to receive distributions and other Another recent example is the US$500 Stadtmiller explains
payments from its subsidiaries as the million First Gulf Bank (FGB) Sukuk in that: A Tier 1
underlying revenue-generating assets January 2012, which comprised a hybrid capital issue has
for the Sukuk. Wakalah and Mudarabah structure. economic features
that are similar to
Sipchem structure Perpetual popularity fixed income from the
The innovation in the Sipchem Hybrid Sukuk are garnering increasing investors perspective,
deal lies in its asset basis. A Sukuk attention and perpetual bonds are one of but the issuer can record
normally requires that the issuer has the most attractive new forms; brought them as equity on
unencumbered tangible assets available, into the spotlight by the Malaysia their balance sheet.
Airlines (MAS) RM2.5 billion (US$816 The transaction has
which in the case of Sipchem was a
million) perpetual junior Sukuk program. been compared to
problem as the firm was a holding
Launched in June 2012, the first tranche the preferred shares hybrid Tier 1 deals
company with relatively few assets of its
of RM1 billion (US$326.4 million) was done by US banks, as because the notes
own and encumbrances at the operating
fully subscribed by Malaysian retirement will be accounted for as equity instead
level. The challenge was therefore to
fund Kumpulan Wang Persaraan of liability, they will not be required
broaden the asset base of the holding
(KWAP) with MAS claiming to have by Basel III to include loss-absorption
company to accommodate a Shariah
received firm commitments for the rest of provisions. The ADIB Sukuk is designed
compliant structure based on real assets.
the program. to comply with the Basel committees
criteria for additional Tier 1 capital
The Sipchem deal therefore involved an
Unlike normal bonds, perpetual bonds in anticipation of possible Basel III
innovative Mudarabah Sukuk structure implementation in the UAE, yet despite
centered around the intangible rights do not have a redemption date; and the
holders receive a coupon only when the its hybrid nature will be based on a very
between a holding company and its simple Mudarabah structure. This is
subsidiaries. This made the right of the company issues dividends, rather than
receiving a periodic fixed coupon. The very straightforward, said another
holding company to receive distributions banker. The most challenging part of the
and payments from its subsidiaries the perpetual Sukuk has the advantage of
being recognized as equity capital under structuring was converging Islamic rules
key underlying revenue-generating with Basel rules.
asset of the Sukuk basically stripping Malaysian accounting standards, while
out equity and using it as a asset still giving a long-term funding rate of
basis for a Mudarabah structure. At
6.9%. It therefore provides equity at a Sabanas convertible first
relatively lower cost of capital compared Over in Singapore, the country is
the launch of the deal Dipti Thakar, a
to common equity, whilst oering an making its own contribution towards
counsel at Latham & Watkins in Dubai,
attractive yield to investors. Rafe Haneef, pushing back the boundaries with
commented that: This Sipchem Sukuk
CEO of HSBC Amanah Malaysia, noted the issuance in October of the first
structure further reflects the increasing
at the launch of the transaction that the convertible Sukuk since 2009, Sabana
sophistication of the available products in
hybrid Sukuk was an attractive option for REITs SGD80 million (US$65.3 million)
the Saudi Arabian market. This product
companies which have reached a certain 4.5% convertible Sukuk due in 2017. The
is a great addition to the toolkit available
debt-to-equity ratio level. It is just structure was specifically tailored to the
to corporate treasurers in the market.
emerging as a concept and hopfully you REITs needs; combining the concepts
will see the market trend move towards of Murabahah, Ijarah and Wakalah to
Sophistication through that. It will gain popularity here among allow the Sukuk to acquire property
simplicity companies which do not want to dilute assets which then formed the basis for
Along with the growing use of intangible their shareholding and at the same time the underlying revenue-generation for
assets and new structures lies another are constrained by debt levels. the Sukukholders.
trend: the development of hybrid
structures using simple Islamic building Tier 1 trend Gregory Man, a senior associate with
blocks in order to create instruments that This new trend towards equity-style Sukuk Cliord Chance representing Morgan
suit the specific needs of issuers. is growing increasingly popular as issuers Stanley as sole lead manager and
figure out how to structure their Sukuk bookrunner, explained that: We needed
Stadtmiller explains that: Essentially to meet their balance sheet requirements. to execute the transaction in two stages
a standard Sukuk is just an Islamic Most recently, Abu Dhabi Islamic Bank because Sabana REIT required the
bond and the simple structure has a (ADIB) announced the launch of an funding from this issue to acquire the
coupon payment with a profit rate and innovative new Shariah compliant hybrid real estate asset that would ultimately
repayments until the end. But you can Tier 1 non-call perpetual notes issue, underlie the Sukuk. We entered into
make Islamic structures with other which is expected to be benchmark sized at a Murabahah transaction to provide
features. For example the Dana Gas around US$500 million and will be the first Sabana with its acquisition funding,
Sukuk; which has a structure which international perpetual Sukuk. The key and then the asset was injected into the
combines standard bond-like features feature of the Reg S deal is its simplicity, structure so that the transaction going
such as fixed payments and repayment of however, with one banker commenting forward was part-Murabahah and
principle with an option to convert into that: It was specifically designed to avoid Ijarah.
shares. being over-engineered. continued...
The deal represents one of the most be approved by some Shariah boards conservative, with little appetite for
sophisticated Sukuk structures ever seen and not by others, and that limits innovation and a preference for short-
on the market, with Man commenting the potential investor base, explains term vanilla Sukuk of five years or less.
that the most dicult aspect was in Stadtmiller. So having a more complex So while issuers may be excited about
creating the complex structural flexibility structure means getting more Shariah the new opportunities oered by more
for convertibility features that investors boards in the region on board with the complex Sukuk structures, there is no
required. However, the team that worked idea and getting them comfortable with guarantee that the market will respond.
on the transaction have high hopes the underlying structure as Shariah
for the future with the Sabana REIT compliant. Stadtmiller explains that: As institutions
structure acting as a template for new that are dedicated to using Islamic
issuances. Matt Fairclough, a partner A key example of this was the Goldman finance grow, inevitably they will want
at Cliord Chance, commented on the Sachs deal, which proposed a structure to try dierent structures. But in terms
launch that: Islamic finance is becoming that used commodity contracts which of what can actually be done in the
more sophisticated and we have seen the had the potential to be traded away from marketplace, I would say that one of the
development of both hybrid Sukuk as par on the Irish exchange. This led to major limiting factors is investor appetite.
well as more sophisticated convertible vehement controversy between Shariah Particularly in the Middle East, people
Sukuk such as this. We will continue to scholars as to the Shariah compliance have historically been very content with
see these sorts of developments as the of the deal and eventually halted the plain vanilla Sukuk, with a fixed coupon
Islamic finance industry continues to process entirely. and secure return. So the challenge
grow. is to engage with the Islamic investor
As the transactions get more complex in community and see whether they are
Compliance complaints terms of Islamic structure it does open up prepared to take new risks with slightly
However, a vital issue holding back the possibility of dierent opinions, and more complex products.
the complexity of Sukuk transactions is it will take more time and more eort to
the lack of standardization regarding get a more complex structure that a wide Perhaps this should stand as a warning
Shariah compliance. While in Malaysia range of parties will agree to, warns for the industry. Innovation is vital, but
the market benefits from a single Shariah Stadtmiller. not for its own sake. Sophistication of
board which decides whether a structure Sukuk should develop in the cause of
is permissible, in the Middle East there Investor concern advancement and improvement; oering
is no common board which can cause Market players have also expressed real benefits to investors and enhancing
considerable problems. They have to concern at whether Islamic investors rather than impeding compliance with
get more stakeholders on board; and will buy into the new hybrid structures. Shariah which is of course the highest
sometimes a complex structure will Sukukholders are traditionally goal of all. LM
Framework for Islamic CSR However, the decision to do so will Turkey sovereign Sukuk
depend on the success of the scheme for
MALAYSIA: The Accounting Research
paddy farmers.
boosts standing
Institute (ARI) of Universiti Teknologi GLOBAL: Turkeys debut international
MARA (UiTM) is developing an Islamic sovereign Sukuk, worth US$1.5 billion,
GLOBAL
corporate social responsibility (i-CSR) which was issued on the 18th September
general practice framework for Islamic this year, has propelled the country
financial institutions.
NBAD in South Korean foray to second place in the primary Sukuk
market for the month of September, after
Associate professor Dr Faizah Darus said GLOBAL: National Bank of Abu Dhabi Malaysia. A report by KFH-Research
that the implementation of the i-CSR (NBAD), which has a Shariah compliant revealed: By country of domicile,
framework will require the endorsement window, will see its first venture into Malaysia topped the primary Sukuk
of the Malaysian central bank. South Korea via a cooperation with the market with total issuances of US$10
administrative organization of South billion or 85.3% of market share in
Al Baraka to grow in Pakistan Koreas capital, the Seoul Metropolitan September 2012. This was followed by
Government. Turkey at US$1.5 billion or 12.8% market
PAKISTAN: Al Baraka Bank (Pakistan)
will open more branches and launch share, and Bahrain at US$99.9 million or
This is to help facilitate the Seoul 0.9% market share.
new products as part of its expansion International Financial Centers
plan in the country, according to Adnan development into a regional financial
Ahmed Yousif, the chairman of Al Ringgit-denominated paper accounted
hub. for RM9.8 billion (US$3.2 billion) or
Baraka Islamic Bank and the president
and chief executive of Al Baraka 8.93% of total Sukuk issued, followed
Banking Group. Faisal Private Bank to by US-dollar denominated paper. Total
transform volume of Sukuk issued in the first nine
months of this year has reached US$103
PRS to launch offering GLOBAL: Swiss-based Faisal Private billion; of which US$11.6 billion was
MALAYSIA: The Private Retirement Bank, which is owned by Bahrains issued in the month of September. This
Scheme (PRS), a voluntary retirement Ithmaar Bank, will be converted into a was a 135% increase compared to the
saving scheme structured by private family oce managing the capital of a corresponding period in 2011.
sector fund managers, expects to launch single family, announced Ithmaar on the
24 funds by mid-November; some of 1st November 2012. According to the report, Murabahah is
which will be Shariah compliant. The currently the favored mode of Sukuk
funds are currently pending approval Ithmaar did not disclose the family issuance, representing 61.4% of global
from Securities Commission Malaysia. involved in the deal. The move will also Sukuk issued, followed by Ijarah at
enable the parent bank to focus on its US$2.1 billion, or 18.3%, and Musharakah
The approved providers are core retail and commercial business, with at US$1.7 billion, or 14.5% of total
AmInvestment Management, American both banks having struggled following issuances.
International Assurance, CIMB-Principal the 2008 financial crisis.
Asset Management, Hwang Investment The Turkey Sukuk, which matures in
Management, ING Funds, Manulife Facilitating global Islamic 2018 and has a yield of 2.8%, received
Unit Trust, Public Mutual and RHB financing growth book orders of up to US$8 billion; or five
Investment Management. times oversubscribed. However, some
GLOBAL: KFH Research, a subsidiary
have argued that the 58% uptake by
of Kuwait Finance House, has signed
Farming Takaful a memorandum of understanding
Middle East investors will not bode well
for the Sukuk in the secondary markets
MALAYSIA: Noh Omar, the minister of (MoU) with the World Bank aimed at
as it is too heavily concentrated on a
agriculture and agro-based industry, has developing the Islamic finance industry.
single region. It was reported that the
said that a government-backed Takaful
sovereign Sukuk dropped to US$98 cents
protection scheme for paddy farmers The MoU will enable both parties to
on the dollar in the secondary market
might be extended to other farming exchange expertise and professional
after its issuance, and has remained
sectors in the country.
continued... below par since then.
financing portfolio increased to QAR12.6 He was previously the chief sales ocer
million (US$3.46 million) from QAR10.6 Volume 9 Issue 45 14th November 2012 of Maybank Asset Management.
million (US$2.91 million).
Meet the Head
Khalfan Abdallah Salim, head of product Emirates NBD Asset
Bank offers gold account development and Shariah compliance, Management
YEMEN: Tadhamon International Amana Bank, Tanzania UAE: Emirates NBD Asset Management
Islamic Bank has signed an agreement has named David Marshall as its new
with Dubai-based Gold Arab Emirate, Features senior executive ocer. Prior to his
an online gold and silver trading firm, The awakening of the IBF dragon; By appointment, he was the head of product
which will allow the banks customers to Amirullah Haji Abdullah, advisor of and distribution at the firm.
hold gold instead of cash in their savings Islamic banking & finance at Nova
accounts. Training and Education Institute, Hong
Kong. University of East London
UK: The University of East London has
Microfinance: A challenge that Islamic appointed Dr Gaar Khalid as the new
finance can meet; By Mohammad director of its Islamic finance center.
Abdullah Dewaya, head of Shariah audit
and compliance, Dhofar Bank Oman. Central Bank of the UAE
UAE: The Central Bank of the UAE has
Islamic microfinance in Tanzania; By
appointed Khalifa Mohammed al-Kindi
Khalfan Abdallah, head of product
as its new chairman, replacing Khalil
development and Shariah compliance at
Foulathi, whose four-year term expired
Amana Bank Tanzania.
in July this year.
A possible catalyst
Last month, South Africas quasi- compliant, but thus obviously have a far Our key challenges as investors are to
sovereign body Trans-Caledon Tunnel narrower universe than the conventional obtain a suitable spread of Sukuk input
Authority announced that it was fund universe. portfolios as required by Regulation 28
considering the issuance of Sukuk to (of the Pension Funds Act) and to also
fund two large infrastructure projects Mogammad Saliegh Salaam, an close the yield gap between Sukuk and
worth about ZAR26 billion (US$3.06 investment manager at Old Mutual bonds. Ultimately we would also like
billion). The announcement comes in Investment Group, said in a report that to see the development of a secondary
the wake of the federal governments the Islamic investment community needs tradable market for domestic Sukuk.
own revelation that it was to issue a lot more products from the various
its first sovereign Sukuk, slated for investment banks. They need to provide Last year, regulators amended Regulation
March 2013. The authority stated the us a lot more Shariah compliant products 28 a provision that allows employees of
sovereign issuance would be gauged or avenues in which to deploy our a company to choose the types of assets
as a benchmark on whether it would cash. That is probably by far the biggest a retirement annuity, preservation fund
proceed towards the Islamic route. challenge. or pension/provident fund may invest
in, and what maximum percentage of the
South Africa is one of the oldest Islamic There is also the issue of Shariah portfolio may be invested in specific asset
markets in the continent, with fully- compliance. According to Saliegh, the classes. Termed as member level choice,
fledged Islamic bank Al Baraka Bank first products of these investment banks may only Shariah compliant balanced funds
opening its doors in 1989. This paved not necessarily satisfy the other parties have been approved to be oered to
the way for other conventional financial Shariah boards. We need to make sure these investors. There are currently three
institutions such as First National Bank, that all the products satisfy our Shariah asset management companies oering
HBZ Bank and Absa Bank eventually boards. such funds: namely Oasis, Old Mutual
incorporating Islamic windows alongside and Kagiso.
their conventional practices. When contacted by Islamic Finance
news, Abdulazeez Davids, the head of With Sukuk the most popular product
However, as in so many other Islamic research and portfolio manager at Kagiso in the Islamic finance industry at the
finance jurisdictions, South Africa faces a Asset Management, explained that he moment, this is the perfect timing for
common challenge in the lack of Islamic welcomed the state authoritys decision quasi-sovereign and corporate bodies
investment tools. South African fund to consider a Sukuk issuance as Islamic to raise capital via the Islamic route and
managers compromise by investing bonds were sorely needed to enable perhaps provide South Africa with much-
in local money market instruments better pricing, greater diversity and needed exposure to the industry. RW
and equities that are deemed Shariah healthy competition amongst issuers.
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Islamic finance has a long history. initial target client base. The last credit creation and encourage sound risk-
However, it has only developed on a census indicated that there were just management procedures.
global scale over the last 30 years. In over 475,000 Australian Muslims,
that relatively short space of time the equalling approximately 1.7% of the These ethical principles will prove as at-
industry has grown rapidly and the total population. At first glance this tractive to the Australian market as they
global market now exceeds US$1 trillion. may appear small when compared to have in the UK. Ethical and responsible
other countries such as the UK which investment is well-established in Australia
Many will find it surprising that has a Muslim population in excess of 2.5 and according to the Responsible Invest-
Australia was one of the first developed million. However it is a solid base from ment Association Australasia (RIAA) has
countries to establish Islamic finance. which to expand and it is also important in many areas outperformed the conven-
Shariah compliant cooperatives have to examine the wider potential market. tional market. A 2011 RIAA report states
been oering personal and small At the Bank of London and The Middle that core responsible investment rose 8%
business financial services such as East (BLME) we have found that all faiths between 2010 and 2011 from AU$18.12
mortgages from the 1990s. Since then and cultures are attracted to Islamic billion (US$18.7 billion) to AU$19.55 bil-
growth has been modest; however we finance with the majority of our clients lion (US$20.24 billion). Islamic financial
expect the pace of development to pick being non-Muslim. institutions are well positioned to play a
up exponentially in the coming years, part in this market.
with the Australian Islamic finance Attraction to Islamic finance
industry diversifying and expanding So if clients are not choosing to use These markets will be the key drivers of
away from its traditional base of small Islamic finance purely on religious growth for Islamic finance in Australia.
cooperative oerings into larger financial grounds what is the attraction? From In addition, Australias proximity to and
organizations and asset managers. BLMEs experience, one of the primary growing relationships with Asia will
be an important factor. For example
motivating factors is financial. Clients are
the demand for commodities from
Many looking for competitive returns from their
investments and competitive financing
developing counties such as China
and India continues to increase and of
people feel costs when they wish to borrow. It is vital
that an Islamic bank or asset manager
Australias top 10 trading partners, eight
are in the Asia Pacific region. Malaysia
disillusioned with oers a comparable service, both in terms
of product and performance, to their
has a free trade agreement with Australia
which provides a strong link to a country
and disenfranchised conventional counterparts in order to
compete in the financial market place.
that has an established Islamic finance
by the large
market. Indeed according to Standard
BLME has found that by providing Chartered Bank, Malaysia issued 62%
returns that meet or exceed those of
conventional banks
of all Sukuk between 2007-11. Indonesia
conventional providers we have become has the largest Muslim population in the
an alternative option for any client seeking
and are turning to an investment or financing.
world but currently only 5% of the total
banking assets are Shariah compliant
Ensuring Shariah governance is critical Academys 19th session and decision Further, according to Appendix 2 of the
for the forward progress of Islamic No. 177 regarding the role of Shariah SGF the Shariah advisory member cannot
banking. It is critical not only to ensure supervision in regulating the operations be an employee of the IFI or any of its
confidence of investors and the public of Islamic banks its importance, related companies for the current or the
in the authenticity of the conduct and stipulations and the way it operates. last financial year. This again would be in
practise of Islamic banking, but also to According to the OIC Fiqh Academy the line with the OIC Fiqh Academys 177th
minimize fiduciary and reputational risks Shariah board must be independent, and decision that a Shariah advisory member
to Islamic financial institutions (IFIs). in order to achieve that, the following cannot be the employee of the IFI.
issues must be considered:
The central bank of Malaysia, Bank However under Principle 2.4 of the SGF,
Negara Malaysia (BNM), developed the The appointment and removal of the board of directors are encouraged
Shariah governance framework (SGF) Shariah board members and the to appoint at least one member of the
eective the 1st January 2011 for IFIs with determination of their compensation Shariah advisory board as a member
the primary objective of enhancing the should be done by a public body. of the board of directors. According
role of the board of directors, the Shariah The authentication of the to Principle 2.4: The presence of a
advisory board and the management in aforementioned items will then be director with sound Shariah knowledge
relation to Shariah matters: Including done by a central Shariah authority or would foster greater understanding and
enhancing relevant key organs having its representative. appreciation amongst the board members
the responsibility to execute the Shariah The members shall not be an on the decisions made by the Shariah
compliance and research functions aimed executive director in the Islamic Committee. This provision is in direct
at the attainment of a Shariah based financial institution or an employee contradiction to the OIC Fiqh Academys
operating environment. of the Islamic financial institution 177th decision.
or engaged in jobs that are contrary
A Shariah advisory board is defined by to the role of the Islamic financial It is opined that the Shariah advisorys
the AAOIFI as an independent body institution. independence might be compromised if
of specialized jurists in Fiqh Mualamat a Shariah advisory board member sits
(Islamic jurisprudence). However, the Based on the above, the provisions in the on the board of directors. Further, what
Shariah supervisory board may include SGF that relate to the Shariah advisory would be the duty of the Shariah advisor:
a member other than those specialized board are discussed under the following would he/she owe a fiduciary duty to the
in Fiqh Muamalat, but who should be an headings: company as directors do?
expert in the field of Islamic financial insti-
tutions and with the knowledge of Fiqh Appointment It is opined that there would be a
Mualamat. The Shariah supervisory board According to Appendix 2 of the SGF blurring of lines of responsibility, roles
is entrusted with the duty of directing, the board of directors shall, upon and duties if a Shariah advisor sits on the
reviewing and supervising the activities recommendation of its nomination board of directors.
of the Islamic financial institution in order committee, nominate the appointment
to ensure that they are in compliance with of the members of the Shariah advisory A better option would be for a Shariah
Islamic Shariah rules and principles. The board. The appointment and the advisor to be invited in certain special
Fatwas and rulings of the Shariah supervi- reappointment of a Shariah advisory occasions to the board meetings in the
sory board shall be binding on the Islamic board member is subject to the prior event there are Shariah matters that are
financial institution. written approval of the central bank and discussed. The Shariah advisor should
the Shariah Advisory Council. The SGF not be a permanent member of the board
Key words can be noted from the further provides that in this application of directors: this is to ensure a clear
above definition: the Shariah advisory the central bank may impose necessary separation of responsibility, role and
board should be independent, they conditions it deems fit in addition to the duty between the board of directors and
are specialists in Fiqh Muamalat and/ requirements in the SGF. the Shariah advisory board.
or IFIs and Fiqh Muamalat, and their
duties include directing, reviewing, and Comparing this to the requirement of Also each Shariah advisor is only allowed
supervising IFIs on whom their Fatwas the OIC Fiqh Academys 177th decision to sit on one Shariah Board in the same
are binding. How the SGF ensures it would seem that since appointment of industry (SGF Appendix 2). This means
these functions and roles of the Shariah Shariah advisory board members must that each Shariah board member can only
advisory members will be assessed below. be approved by the central bank and the sit on the Shariah board of one Islamic
Shariah Advisory Council, this provision bank and at the same time can sit on
How a Shariah advisory body remains on ensuring independence of the Shariah the Shariah advisory board of a Takaful
independent is found in the OIC Fiqh advisory board seems to be satisfied. continued...
Continued
Continued
The inaugural
The only issue is whether the Shariah
advisors themselves are aware of this
Islamic Finance news Forum
higher status of responsibility? On to be held in Saudi Arabia
this point reference should be made to
Principle 2.3 of the SGF which provides
that the board of directors must ensure 12th - 13th November 2012
that the Shariah advisory members are Four Seasons Hotel Riyadh at Kingdom Centre
aware of their fiduciary responsibilities
in discharging their duties. Confirmed Speakers
The future survival of Islamic finance conventional counterparts, underpinned home finance product which could be
will depend on a forward-thinking by profit maximization. very simply designed to avoid negative
organizations capacity to generate equity but instead which Islamic
new ideas and eectively deliver Vulnerability of Islamic finance organisations have simply used
competitive, credible alternatives to to replicate the conventional mortgage
targeted customers. A company which finance? structured products.
seeks to outperform its rivals will In reality prevalent Islamic finance
only be able to achieve this by firmly is much more vulnerable than its It should be noted that Islamic finance
establishing a relationship that they can conventional counterpart as its processes at this stage is still prohibition-driven
preserve by delivering genuine value to are much more inecient and the legal finance. The two fundamental elements
each customer the ultimate barometer underpinnings of Islamic transactions are its drivers Riba and Gharar, and
to measure success with. are not yet robust and do not navigate notably almost all Islamic finance
towards any Shariah standards. products almost always compromise
Especially in the case of disputes, there with either along the way. The two
Before these still remains uncertainty as to whether
the court ruling is based on Shariah or
prohibitions that can explain distinctions
between contracts deeming them valid or
pressing civil law. invalid are simply stated by the famous
scholar Ibn Taymiyya.
issues can hope to The rulings that have taken place in
English courts for example have not This is why Shariah is the only safeguard
be solved, Islamic sought to rule according to Shariah
as they do not profess to or have the
able to provide a realistic safety net to
regulate the activities of the providers
finance needs to expertise to deliver a Shariah solution. of Islamic finance. Realistically without
the political will to build the institutional
decide if it really Furthermore there is also uncertainty on
how insolvency and default should be
framework vital to deliver Islamic finance
it is hard to see the long-term survival of
wants to become handled; the dierent interpretations of
Shariah rulings across the jurisdictions;
the Islamic financial experiment.
Continued
have very
need to step in to establish a structure wealth are controlled by 3% of its
to work with institutions who want to population, in a demand-led world
limited powers in
deliver Islamic finance by delivering the fuelled by technological advances like the
following: internet, Facebook and mobile phones.
1. A legal framework treaty, which terms of delivering We have seen how peoples desire for
must collectively allow all member
countries to ensure that any the fundamental justice and fairness has mobilized masses
like the gallant youth, the drivers of
organization under its juristic control
must be governed by and abide under institutional the Arab spring, who have been able to
remove greedy and tyrannical dictators.
strict Shariah safeguards. Perhaps
the establishment of some kind of framework which Increasingly large financial institutions
Shariah court which should set the
precedent for all bodies to adhere to. would allow us to and autocratic regimes that are seen
to preserve the interest of the few are
Vol 9 Issue 44
Portfolio Size
products in the Islamic finance industry. US$106 Dividend: US$2.55
US$105.27 US$105.91
AED 300m
Globally, Malaysia pioneered the market US$104
after becoming the first country to AED 200m
US$102.64
US$102.80
introduce formal guidelines specifically US$102
US$102.02 AED 100m
for Islamic REITs in November 2005 that US$101.16
WE SEE AN EVEN
BRIGHTER FUTURE IN ASIA
eastspringinvestments.com.my
Market commentary
FTSE Physical Commodity Industrial Metals Index (FTSE PIMI)*
risen to 940,000 mt, the highest level since
September 2010. According to Aurubis,
1,000 Inception 1997, Base 100 the largest copper producer in Europe,
800 the intended launch of copper ETFs by
JP Morgan and Blackrock (still to be
600
approved by US regulators) may cause
400 the two institutions to buy 180,000 t of
200 copper for physical deposit.
0
Apart from that we have seen a weak
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
energy sector with WTI- and Brent-
FTSE PIMI prices falling by 7% and 3% to US$85.5
and US$108.5 per barrel respectively -
*The Physical Commodity Industry Metals Index includes zinc, nickel, cooper and aluminium. The
thereby pushing the spread between the
Index series is Shariah compliant.
two contracts again to record highs of
US$24/barrel. The prevailing price levels
Agriculture / Corn 6 months indicate lower geopolitical risk premiums
and sucient stock levels in the short
1,000
and medium-term.
800 After the sharp price increases during
the summer months in the course
600 of the worst US drought in 50 years,
grains are going through a period of
400 price consolidation with slight negative
May 12 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 tendencies as the late harvest turned out
to be better than initially expected. Eighty
In this issue we focus on the recent though the latest quantitative easing percent of the US corn and soya harvests
activity in the agriculture sector. programs are suering a diminishing are already brought in and due to the
marginal utility. lack of storage facilities farmers sell their
Diminishing economic growth rates crop directly from the fields - thereby
mixed with a disappointing earnings Base and precious metals were putting pressure on futures markets.
season and revised profit outlooks put particularly hard hit with nickel, zinc and However, with price increases of 30%
pressure on financial markets in October. lead losing more than 10%. The sector on average this year, the agricultural
On the credit side we have seen some is confronted with declining growth complex remains top ranked for 2012.
strength in the US housing sector, as rates in emerging markets, diminishing
well as better than expected consumer global demand and to a certain degree Merit Commodity Partners. For more
sentiment data. All in all, it seems as with overcapacity and high stock levels. information or a daily update, contact info@
Aluminium stocks in Shanghai have mcpag.com or info@ftse.com
:($5(12:21
L3DGL3KRQH
DQG7DEOHWV
What led to this fund being launched? we know have proven desirable in the Fact sheet
In 2009, we believed there were developed world and are likely to be Fund Manager Nicholas Kaiser, portfolio
significant growth opportunities just as desirable as incomes rise in the manager;
overseas. We also felt this type of fund developing world. Scott Klimo, deputy
further helped diversify the Amana Fund portfolio manager
family. Who are your investors (profile)? Trustee The Amana Mutual Funds
Retail (Muslim and non-Muslim) and Trust is overseen by a
What are the key factors that drive the institutional from the US. Board of Trustees:
funds performance?
Benchmark MSCI Emerging Markets
The first factor is our Shariah-based What specific risks does the fund take (Index) Index
screening process. Companies with into consideration? And why?
Apart from the traditional portfolio, Domicile US
excessive debt or that engage in
prohibited activities are not eligible factor and stock specific risks, a Inception Date 28th September 2009
for purchase by the fund. Secondly we developing world fund presents unique Fund Fund Type
are highly disciplined in the price we risk challenges relative to our US-centric Characteristics Open
will pay for a stock. Third, we have growth and income funds. Currency (as of the 30th
Fund Size
very low turnover; less than 10% of the movements or commodity price swings September 2012)
US$19.97 million
funds holdings annually. This keeps can have a larger impact on developing
trading costs to a minimum but more nations. With a developing world fund NAV per share
importantly allows us to avoid the one must be cognizant of political risks, US$10.44
pitfalls of behavioralism that often cause while most OECD countries dont have Minimum / Subsequent
investors to buy when enthusiasm and coups or revolutions. Of course, such Investment
prices are at their highest yet value at its events often present excellent buying US$250 / US$25
lowest and vice versa. opportunities.
*Fund portfolio
This is especially important in market How often do you review this fund?
downturns as simple math tells us that a We review the fund daily as the nature of
portfolio declining in value by 50% needs the investments means theres that much
to rise 100% to reclaim its original value. more to know, understand and interpret.
Our portfolios consistently outperform Its not enough to know what the Federal
in down markets, while capturing the Reserve is doing. We need to know
majority of the gain in rising markets. whats happening at the Bank of China
We are able to hold stocks for long or possible outcomes of the elections in
periods because of the extensive research Malaysia.
we conduct on portfolio candidates,
seeking companies with identifiable What is the market outlook for this
and sustainable positions of superiority fund? Foreign Equities 64.79%
in their industries, high quality While we prefer positive market Cash 35.21%
management teams and an opportunity environments, tactical market calls are
to substantially grow their earnings. not a significant contributor to fund
performance. Our goal is to select the *Industry allocation
As a developing world fund we best possible companies in all market
often have opportunities to invest in environments and with our multi-year
companies replicating business models average holding period for investments,
that have succeeded in the developed tactical portfolio adjustments are not a
world or providing goods and services part of our toolkit.
*Comparison Graph
$15,000
120
110
100
90
Index Values
80
70
60
50
Dec-99
Dec-02
Dec-05
Dec-08
Dec-11
Jun-01
Jun-04
Jun-07
Jun-10
Sep-00
Sep-03
Sep-06
Sep-09
Sep-12
Mar-02
Mar-05
Mar-08
Mar-11
Top 10 Annualized Returns for ALL Funds since Inception
Fund Fund Manager Performance Measure Fund Domicile
1 Atlas Pension Islamic - Equity Sub Atlas Asset Management 19.96 Pakistan
2 Public Islamic Select Enterprises Public Mutual 16.43 Malaysia
3 Reliance Global Shariah Growth - USD I Reliance Asset Management 14.27 Guernsey
(Malaysia)
4 Public Islamic Opportunites Public Mutual 12.92 Malaysia
5 Public Islamic Dividend Public Mutual 12.11 Malaysia
6 Meezan Tahauz Pension - Equity Sub Al Meezan Investment Management 12.02 Pakistan
7 Public Islamic Equity Public Mutual 11.54 Malaysia
8 Am-Namaa' Asia-Pacific Equity Growth AmInvestment Management 11.35 Malaysia
9 Atlas Islamic Stock Atlas Asset Management 10.63 Pakistan
10 Amana Growth Saturna Capital 9.77 United States
Eurekahedge Islamic Fund Index 3.78
Based on 28.57% of funds which have reported October 2012 returns as at 6th November 2012
Taking into account funds that have at least 12 months of returns as at 30th October 2012
Comprehensive data from Eurekahedge will now feature the overall top 10 global and regional funds based on a specific duration (yield to date, annualized returns,
monthly returns), Sharpe ratio as well as delve into specific asset classes in the global arena equity, fixed income, money market, commodity, global investing (which
would focus on funds investing with global mandate instead of a specific country or geographical region), fund of funds, real estate as well as the Sortino ratio. Each table
covering the duration, region, asset class and ratio will be featured on a five week rotational basis.
Eurekahedge Islamic Fund Equity Index over the last 5 years Eurekahedge Islamic Fund Equity Index over the last 1 year
105.000 113.000
100.000
95.000 108.000
90.000
103.000
Percentage
Percentage
85.000
80.000
98.000
75.000
70.000 93.000
65.000
60.000 88.000
Oct-11
Oct-12
Aug-12
Apr-12
Jan-12
Jul-12
Sep-12
May-12
Mar-12
Dec-11
Jun-12
Nov-11
Feb-12
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Feb-08
Feb-09
Feb-10
Feb-11
Feb-12
Based on 26.54% of funds which have reported October 2012 returns as at 6th November 2012
Contact Eurekahedge
To list your fund or update your fund information: islamicfunds@eurekahedge.com
For further details on Eurekahedge: information@eurekahedge.com Tel: +65 6212 0900
Disclaimer
Copyright Eurekahedge 2007, All Rights Reserved. You, the user, may freely use the data for internal purposes and may reproduce the index data provided that
reference to Eurekahedge is provided in your dissemination and/or reproduction. The information is provided on an as is basis and you assume and will bear all
risk or associated costs in its use, and neither Islamic Finance news, Eurekahedge nor its aliates provide any express or implied warranty or representations as to
originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for any purpose.
Malaysias
next year, as mentioned in the 2013
Prior to the budget announcement,
budget. The government has allocated
Malaysian Takaful operators had called
RM50 million (US$16.32 million) to the
program, which is expected to benefit agricultural sector for the government to include tax rebates
for Takaful premiums, similar to the ones
172,000 farmers.
currently include aorded for the Employees Provident
Fund and conventional life insurance.
Should the scheme successfully kick o,
the government will consider expanding a lack of crop However, there was no progress reported
on the issue.
the Takaful cover to other farming
activities, including vegetable and cash diversification, The 2013 budget also included a
crop farming and livestock breeding.
The Takaful Padi Protection Scheme will
shortage of skilled statistical summary of the Malaysian
Takaful industry, with Takaful assets
include coverage for paddy farms of 10
hectares or less.
farm labor, the accounting for 9% of total insurance
assets at RM18.3 billion (US$5.97 billion)
The average size of a paddy farm in
need for more as at December 2011; net contributions
sophisticated
amounting to RM2.6 billion (US$848.67
Malaysia, which is usually run by
million) as at July 2012; and new Family
smallholders, is 1.06 hectares. Wetland rice
machinery and a
Takaful contributions recorded at RM2
constitutes 85% of the total rice area in the
billion (US$652.81 million) in July 2012.
country with the remaining 15% made up
of upland rice, based on recent statistics. need to maximize Market penetration for Family Takaful
According to the Malaysia Agricultural
Research Development Institute
land stood at 13% in July 2012; while gross
direct contributions for General Takaful
(MARDI), the demand for rice in both
the international and domestic Malaysian
utilization grew to RM1 billion (US$326.4 million) in
July 2012, charting a 14.2% growth over
the private sector in Malaysias food and the same period last year. NH
market has increased from 1.8 million
tonnes in 1995 to 2.3 million tonnes agriculture production industry, with
in 2010, due to the countrys growing total private investments and agriculture
population. in the 1990s only reaching RM9.5 billion
(US$3.1 billion), compared to RM84
The government is also confident of the billion (US$27.4 billion) invested in
prospects of increased domestic rice manufacturing.
production to cater to domestic demand,
due to an undersupply in international The challenges facing Malaysias
markets. agricultural sector currently include a
lack of crop diversification, shortage of
MARDI also believes that there is a skilled farm labor, the need for more
growing need for more involvement from sophisticated machinery and a need
www.takaful-ikhlas.com.my
A The Islamic banking industry has provided room for the growth of Islamic
shown a high level of flexibility finance in the infancy stage, where
over the last few decades and is
responding to the needs of its user by
A Sukuk have never really been asset
backed structures 95% have
the motive was to introduce Islamic
finance as parallel to conventional loans.
continuous innovation and is coming up always been asset-based with the same However, since this infancy stage has
with novel ideas in terms of new product credit risk as unsecured debt. passed, asset-backed securities should
structures. replace the issuance of asset-based
KHALID HOWLADAR securities.
Similarly, the recent focus of moving Senior credit ocer, asset-backed and Sukuk
toward asset-based Sukuk structure is finance, Moodys Middle East The issuance of asset-backed securities
a very positive and healthy transition can provide the following distinguished
for the industry as it will enhance the advantages:
credibility of Islamic banking and would
provide a mechanism where the Islamic
A The asset-backed security makes
sure that the revenue earned from a) The central governments will have
banks and businesses (as partners) would the asset subject to finance, are to make strategic planning before
be focusing on the profits generated distributed among security holders, as receiving finance to make sure that
through the productive process involving against asset-based security, which does assets subject to finance must produce
actual trade and business transactions. not make sure such revenue distribution, revenues, by themselves;
rather the issuer can pay profits to the b) The Shariah principle of economic
This shift of focus on the underlying security holders from the revenues of any purpose/materiality will be served
business and viewing assets as other asset. which is unfortunately lacking in
investment to generate return and not most of the issues of asset based
only as a collateral will definitely result Accordingly, asset-based security securities;
in better credit decision making and holders receive profits from the issuer, c) There will be control over deficit
Islamic banks active involvement and irrespective of whether the profits financing and obviously will help
monitoring of the business enterprise and are paid out of the revenue streams control inflation;
would increase the transaction based on generated by the asset subject to finance
continued...
Continued
d) Funds will be utilized to finance new structures, and ensure that there is no Supervisory Board to sign o the Sukuk
capital development expenditure of secondary market for such Sukuk that as Shariah compliant. If the original
the Central government which will have already been issued. Failure to owner becomes insolvent, its creditors
yield the prosperity of the general do so may result in a debt crisis that can seize the asset. Conversely the SPV
public. has the potential to bring down every does not have sucient ownership of
stakeholder in the industry. There is a lot the asset to sell it in the case of failure
Based on the above advantages, it is hoped at stake for Malaysia. Currently, Kuala by the original owner to honor its
that Islamic finance can rapidly achieve its Lumpur is attracting a lot of interest in its contractual commitments under the
true objective, in near future, as soon as the Islamic finance industry. In the event of Sukuk arrangements, such as paying rent
asset-backed securities are issued instead a crisis, popularity will diminish. If one for use of the asset.
of issuance of asset based securities. takes for example Bahrain: once a central
player in Islamic finance; today it is a For many years the ratings agencies
MUJEEB BEIG struggling financial center. warned that most Sukuk being issued by
Senior vice president & head of product GCC companies should be regarded as
development & research, MCB Islamic Asset-based Sukuk are all but only being asset-based (using the above
Banking Group conventional bonds in their economic definitions) for several reasons, including
eects. In the event of default, investors insuciently developed insolvency laws
may end up losing significantly and will and local restrictions on ownership of
Continued
instruments should be dealt with in an regards the criteria that should be strictly of the underlying assets. However, this
Islamic environment. Or at least that complied with in order to ensure that a new type of structuring does not, in itself,
legal engineering by convinced and Sukuk issuance is a genuine Shariah ensure Shariah compliance for those new
dedicated practitioners for these cases compliant issuance. In a nutshell, the issuances. Indeed, one should still check
should be stepped up one notch. AAOIFI made it clear that Sukukholders whether the Sukukholders are actually
must be the true legal owners of the granted ownership rights in the under-
PAUL WOUTERS underlying assets. This will ensure that, lying assets and therefore will recover
Senior foreign counsel, Azmi & Associates in case of default of the Sukuk issuer, the eective management rights over the
law oce (Kuala Lumpur-Malaysia Sukukholders can directly manage the underlying assets in case of default of the
and Singapore); Lawyer, Antwerp Bar underlying assets themselves. SPV. If this latter criterion is not complied
Association (Belgium); CEO, Senturiyon with, the new issuances will have the
Global However, it is debatable whether the new same drawbacks as the former Sukuk is-
Sukuk issuances strictly comply with the suances in case of default by the SPV. This
above rule. In practice, this rule has led to means that the classification of Sukuk as
With the delay in the issuance of its planned Sukuk, is the IILM in jeopardy of losing
its relevance to the industry and what other avenues can be explored to help boost the
industrys liquidity?
If you would like to air your views on the next Forum Question, please email your response of between 50 and 300 words to Christina Morgan,
forum editor, at: Christina.Morgan@REDmoneygroup.com before the 16th November 2012.
DATE
ISSUER SIZE
ANNOUNCED IFN Correspondents
AFGHANISTAN: Zulfiqar Ali Khan
Dialog Axiata Sri Lanka LKR51 billion 2nd November 2012 head of Islamic banking division, financial supervision
department, Da Afghanistan Bank
Malaysia sovereign US$1.73 billion 6th November 2012 AUSTRALIA: Gerhard Bakker
director, Madina Village
Almarai Company US$513.57 million 6th November 2012 BAHRAIN: Dr Hatim El-Tahir
director, Islamic Finance Knowledge Centre, Deloitte &
Touche
Sumberdaya Sewatama IDR1 trillion 24th October 2012
BANGLADESH: Md Shamsuzzaman
executive vice president, Islami Bank Bangladesh
MNRB Holding RM150 million 16th October 2012
BERMUDA: Belaid A Jheengoor
director of asset management, PwC
Banque Saudi Fransi SAR2.5 billion 15th October 2012
BRUNEI: James Chiew Siew Hua
senior partner, Abrahams Davidson & Co
Edaran SWM RM1 billion 5th October 2012
CANADA: Jerey S Graham
partner, Borden Ladner Gervais
International Islamic Liquidity US$200 to 500 million 4th October 2012
Management Corporation CZECH REPUBLIC: JUDr Ivana Hrdlickova,
judge, Judiciary, Appelate Court Pardubice
Turkish Airlines TBA th
4 October 2012 EGYPT: Dr Walid Hegazy
managing partner, Hegazy & Associates
Danainfra Nasional RM1.5 billion 4th October 2012 FRANCE: Kader Merbouh
co head of the Executive Master of the Islamic Finance,
Paris-Dauphine University
Weststar Capital RM900 million 4th October 2012 HONG KONG & CHINA: Anthony Chan
partner, Brandt Chan & Partners in association with SNR
Dubai Electricity and Water Authority AED4.5 billion 3rd October 2012 Denton
INDIA: Keyur Shah
Tunisia sovereign TBA 30th September 2012 partner, KPMG
INDONESIA: Farouk A Alwyni
Bank Asya TRY150 million 25th September 2012 chairman, Center for Islamic Studies in Finance,
Economics, and Development
Qatar Islamic Bank US$1.5 billion 16th September 2012 IRAN: Majid Pireh
Islamic finance expert, SEO
Bolton RM380 million 6th September 2012 IRAQ: Khaled Saqqaf
partner and head of Jordan & Iraq oces, Al Tamimi & Co
HSBC Amanah RM3 billion 4th September 2012 IRELAND: Ken Owens
Shariah funds assurance partner, PwC Ireland
Sime Darby US$1.5 billion 3rd September 2012 JAPAN: Serdar A. Basara
president, Japan Islamic Finance
Malako Corporation RM1.8 billion 17th August 2012 JORDAN: Khaled Saqqaf
partner and head of Jordan & Iraq oces, Al Tamimi & Co
Putrajaya Holdings RM3 billion 13th August 2012 KOREA: Yong-Jae Chang
partner, Lee & Ko
Indonesia sovereign US$1 billion 10th August 2012 KUWAIT: Alex Saleh
partner, Al Tamimi & Company
Indonesia sovereign US$750 million 10th August 2012 LUXEMBOURG: Marc Theisen
partner, Theisen Law
Tanjung Bin Power RM4.5 billion 7th August 2012 MALAYSIA: Nik Norishky Thani
head special projects (Islamic), PNB
Kuala Lumpur Kepong RM1 billion 1st August 2012 MALDIVES: Aishath Muneeza
head of Islamic finance, Capital Market Development
Authority
Kimanis Power RM1.16 billion 16th July 2012
MALTA: Reuben Buttigieg
president, Malta Institute of Management
Syarikat Prasarana Negara RM4 billion 12th July 2012
MAURITIUS: Sameer K Tegally
associate, Conyers Dill & Pearman
Trkiye Finans Katilim Bankasi US$300 million 9th July 2012
NEW ZEALAND: Dr Mustafa Farouk
counsel member for Islamic financial institutions, FIANZ
Sudan sovereign US$758 million 5th July 2012
NIGERIA: Hajara Adeola
managing director, Lotus Capital Limited
South Africa sovereign TBA 4th July 2012
OMAN: Anthony Watson
senior associate, Al Busaidy Mansoor Jamal & Co
Indonesia sovereign IDR500 billion 3rd July 2012
PAKISTAN: Bilal Rasul
director (enforcement), SEC of Pakistan
National Treasury South Africa US$500 - 700 million 3rd July 2012
PHILIPPINES: Rafael A Morales
managing partner, SyCip Salazar Hernandez & Gatmaitan
Qatar sovereign US$4 billion 2nd July 2012
QATAR: Amjad Hussain
partner, K&L Gates
Indosat IDR300 billion 20th June 2012
SAUDI ARABIA: Nabil Issa
partner, King & Spalding
Sadara SAR1.4 billion 13th June 2012
SENEGAL: Abdoulaye Mbow
Islamic finance advisor, Africa Islamic Finance
UEM Group RM2.2 billion 13th June 2012 Corporation
SOUTH AFRICA: Amman Muhammad
General Authority of Civil Aviation TBA 24th May 2012 managing director, Absa Islamic Bank
SINGAPORE: Yeo Wico,
Morocco sovereign TBA 23rd May 2012 partner, Allen & Gledhill
SRI LANKA: Roshan Madewala
Amer Group Holding EGP2.7 billion 14th May 2012 director/CEO, Research Intelligence Unit
SWITZERLAND: Khadra Abdullahi
Emirates NBD US$500 million 7th May 2012 associate of investment banking, Faisal Private Bank
TANZANIA: Khalfan Abdallah
Epmex RM1.35 billion 25th April 2012 head of product development and Sharia compliance,
Amana Bank
Noor Islamic Bank US$1 billion 19th April 2012 TURKEY: Ali Ceylan
partner, Baspinar & Partners
Encorp RM1.58 billion 18th April 2012 UAE: Moinuddin Malim
CEO, Mashreq Al Islami
Johor Corp Group RM3 billion 13th April 2012 UK: Siraj Ibrahim
associate, Credit Agricole CIB
Citra Marga IDR1.2 trillion 12th April 2012 US: Saeid Hamedanchi
CEO, ShariahShares
Nakheel AED240 million 11th April 2012 YEMEN: Moneer Saif
head of Islamic banking, CAC Bank
Development Bank of Kazakhstan US$500 million 30th March 2012 IFN Correspondents are experts in their respective
fields and are selected by Islamic Finance news to
Ethical Asset Management TBA 30th March 2012 contribute designated short country reports. For more
information about becoming an IFN Correspondent
please contact sasikala@redmoneygroup.com
National Australia Bank US$500 million 29th March 2012
All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap
1110 1000
1018 920
926 840
834 760
742 680
650 600
Jan Feb Mar Apr May June July Aug Sept Oct Nov Jan Feb Mar Apr May June July Aug Sept Oct Nov
All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap
850 1300
780 1176
710 1052
640 928
570 804
500 680
Jan Feb Mar Apr May June July Aug Sept Oct Nov Jan Feb Mar Apr May June July Aug Sept Oct Nov
All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap
850 1700
780 1520
710 1340
640 1160
570 980
500 800
Jan Feb Mar Apr May June July Aug Sept Oct Nov Jan Feb Mar Apr May June July Aug Sept Oct Nov
2000
1825
1650
1475
1300
Jan-2012 Feb-2012 Mar-2012 Apr-2012 May-2012 June-2012 July-2012 Aug-2012 Sept-2012 Oct-2012 Nov-2012
REDmoney Global Shariah Index Series (All Cap) 6 Months REDmoney Global Shariah Index Series (Large Cap) 6 Months
REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global
REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA
REDmoney GCC REDmoney US REDmoney GCC REDmoney US
1100 1000
980 890
860 780
740 670
620 560
500 450
Jan Feb Mar Apr May June July Aug Sept Oct Nov Jan Feb Mar Apr May June July Aug Sept Oct Nov
REDmoney Global Shariah Index Series (Medium Cap) 6 Months REDmoney Global Shariah Index Series (Small Cap) 6 Months
REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global
REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA
REDmoney GCC REDmoney US REDmoney GCC REDmoney US
1700 1450
1460 1260
1220 1070
980 880
740 690
500 500
Jan Feb Mar Apr May June July Aug Sept Oct Nov Jan Feb Mar Apr May June July Aug Sept Oct Nov
The REDmoney Global Shariah Index Series powered by IdealRatings consists of a rich subset of global listed equities that adhere to clearly
defined and transparent Shariah guidelines defined by Shariyah Review Bureau in Jeddah, Saudi Arabia.
The REDmoney Shariah Indexes provides Islamic investors with an accurate and Shariah-specific equity performance benchmark with optimized
compliance credibility due to the intensive research conducted to ensure that index constituents do not conflict with the defined Shariah
requirements.
IdealRatings is the leading provider of Shariah investment decision support tools to investors globally, including asset managers, brokers, index
providers, and banks to empower them to develop, manage and monitor Shariah investment products and Shariah compliant funds. IdealRatings
is headquartered in San Francisco, California. For more information about IdealRatings visit: www.idealratings.com
22nd Oct 2012 Putrajaya Holdings Malaysia Sukuk Domestic market 262 CIMB Group, AmInvestment Bank,
private placement Maybank Investment Bank
11th Oct 2012 Qatar International Qatar Sukuk Euro market 700 Standard Chartered Bank, HSBC, Qatar
Islamic Bank public issue National Bank
4th Oct 2012 Edaran SWM Malaysia Sukuk Domestic market 245 Hong Leong Bank, CIMB Group
public issue
3rd Oct 2012 Qatar Islamic Bank Qatar Sukuk Euro market 750 Standard Chartered Bank, Deutsche Bank,
public issue HSBC, QInvest
1st Oct 2012 Khazanah Nasional Malaysia Sukuk Domestic market 651 CIMB Group, AmInvestment Bank
Musharakah private placement
20th Sep 2012 Republic of Turkey Turkey Sukuk Euro market 1,500 HSBC, Kuwait Finance House, Citigroup
public issue
20th Sep 2012 MISC Malaysia Sukuk Domestic market 163 HSBC, CIMB Group, AmInvestment Bank
public issue
20th Sep 2012 HSBC Amanah United Sukuk Domestic market 163 HSBC, AmInvestment Bank, Hong Leong
Malaysia Kingdom public issue Islamic Bank, Maybank Investment Bank
18th Sep 2012 Malaysian Airline Malaysia Sukuk Domestic market 165 Maybank Investment Bank
System private placement
7th Sep 2012 National Higher Malaysia Sukuk Domestic market 321 CIMB Group, Maybank Investment Bank
Education Fund public issue
3rd Sep 2012 Cagamas Malaysia Sukuk Domestic market 160 RHB Capital
public issue
29th Aug 2012 Malako Malaysia Sukuk Domestic market 577 Maybank Investment Bank
Corporation private placement
28th Aug 2012 Syarikat Prasarana Malaysia Sukuk Domestic market 644 RHB Capital, Kenanga Investment Bank,
Negara Murabahah public issue CIMB Group
15th Aug 2012 Tanjung Bin Power Malaysia Sukuk Domestic market 1,346 CIMB Group, Maybank Investment Bank
private placement
14th Aug 2012 Celcom Transmission Malaysia Sukuk Domestic market 1,605 HSBC, CIMB Group, Maybank Investment
(M) Murabahah public issue Bank
10th Aug 2012 Khazanah Nasional Malaysia Sukuk Domestic market 806 Kenanga Investment Bank, DRB-HICOM,
Musharakah private placement CIMB Group, AmInvestment Bank
9th Aug 2012 Kuala Lumpur Malaysia Sukuk Ijarah Domestic market 322 CIMB Group, Maybank Investment Bank
Kepong public issue
1st Aug 2012 SME Bank Malaysia Sukuk Domestic market 159 Kuwait Finance House, AmInvestment Bank,
public issue Maybank Investment Bank
19th Jul 2012 Kimanis Power Malaysia Sukuk Domestic market 272 HSBC, CIMB Group
public issue
17th Jul 2012 Aman Sukuk Malaysia Sukuk Domestic market 260 Lembaga Tabung Haji, RHB Capital, CIMB
public issue Group, AmInvestment Bank, Maybank
Investment Bank
1 Projek Lebuhraya Malaysia Sukuk Domestic market 9,610 18.3 RHB Capital, CIMB Group, AmInvestment Bank, Maybank
Usahasama private placement Investment Bank
2 State of Qatar Qatar Sukuk Euro market 4,000 7.6 Standard Chartered Bank, Deutsche Bank, HSBC, QInvest,
public issue Barwa Bank
3 General Authority Saudi Sukuk Domestic market 4,000 7.6 HSBC
for Civil Aviation Arabia private placement
4 Saudi Electricity Saudi Sukuk Euro market 1,750 3.3 Deutsche Bank, HSBC
Company Arabia public issue
5 Celcom Malaysia Sukuk Domestic market 1,590 3.0 HSBC, CIMB Group, Maybank Investment Bank
Transmission (M) Murabahah public issue
6 Republic of Turkey Turkey Sukuk Euro market 1,500 2.9 HSBC, Kuwait Finance House, Citigroup
public issue
7 Tanjung Bin Power Malaysia Sukuk Domestic market 1,298 2.5 CIMB Group, Maybank Investment Bank
private placement
8 Dubai DOF Sukuk UAE Sukuk Euro market 1,250 2.4 HSBC, National Bank of Abu Dhabi, Dubai Islamic Bank,
public issue Citigroup
9 National Higher Malaysia Sukuk Domestic market 1,110 2.1 CIMB Group, Maybank Investment Bank
Education Fund public issue
10 Tanjung Bin Energy Malaysia Sukuk Domestic market 1,089 2.1 HSBC, OCBC, RHB Capital, DRB-HICOM, CIMB Group,
Issuer Tawaruq private placement An Investment Bank, Maybank Investment Bank
11 Perusahaan Penerbit Indonesia Sukuk Ijarah Euro market 1,000 1.9 Standard Chartered Bank, HSBC, Citigroup
SBSN Indonesia II public issue
11 EIB Sukuk UAE Sukuk Euro market 1,000 1.9 Standard Chartered Bank, HSBC, RBS, National Bank of
public issue Abu Dhabi, Citigroup, Emirates NBD, Dubai Islamic Bank,
Credit Agricole
13 Johor Corporation Malaysia Sukuk Domestic market 939 1.8 CIMB Group, An Investment Bank, AmInvestment Bank,
public issue Maybank Investment Bank
14 Malaysia Malaysia Sukuk Domestic market 817 1.6 Maybank Investment Bank
Murabahah public issue
15 Maxis Malaysia Sukuk Domestic market 805 1.5 CIMB Group, Maybank Investment Bank
Musharakah public issue
16 IDB Trust Services Saudi Sukuk Euro market 800 1.5 Saudi National Commercial Bank, Standard Chartered
Arabia public issue Bank, BNP Paribas, HSBC, CIMB Group
17 Sarawak Energy Malaysia Sukuk Domestic market 796 1.5 RHB Capital, Kenanga Investment Bank, AmInvestment
public issue Bank
18 ANIH Malaysia Sukuk Domestic market 786 1.5 CIMB Group, Maybank Investment Bank
private placement
19 DanaInfra Nasional Malaysia Sukuk Domestic market 752 1.4 Lembaga Tabung Haji, RHB Capital, CIMB Group,
public issue AmInvestment Bank, Maybank Investment Bank
20 Qatar Islamic Bank Qatar Sukuk Euro market 750 1.4 Standard Chartered Bank, Deutsche Bank, HSBC, QInvest
public issue
20 Kingdom of Bahrain Bahrain Sukuk Euro market 750 1.4 Standard Chartered Bank, BNP Paribas, Citigroup
public issue
20 BSF Sukuk Saudi Sukuk Euro market 750 1.4 Deutsche Bank, Citigroup, Credit Agricole
Arabia public issue
23 Qatar International Qatar Sukuk Euro market 700 1.3 Standard Chartered Bank, HSBC, Qatar National Bank
Islamic Bank public issue
24 Aman Sukuk Malaysia Sukuk Domestic market 700 1.3 Lembaga Tabung Haji, RHB Capital, CIMB Group,
public issue AmInvestment Bank, Maybank Investment Bank
25 Khazanah Nasional Malaysia Sukuk Domestic market 652 1.2 Kenanga Investment Bank, DRB-HICOM, CIMB Group,
private placement AmInvestment Bank
26 Jafz Sukuk UAE Sukuk Euro market 650 1.2 Standard Chartered Bank, Abu Dhabi Commercial Bank,
public issue National Bank of Abu Dhabi, Dubai Islamic Bank, Abu
Dhabi Islamic Bank, Citigroup, Emirates NBD
27 Syarikat Prasarana Malaysia Sukuk Domestic market 644 1.2 RHB Capital, Kenanga Investment Bank, CIMB Group
Negara Murabahah public issue
28 Malako Malaysia Sukuk Domestic market 577 1.1 Maybank Investment Bank
Corporation private placement
29 DRB-HICOM Malaysia Sukuk Domestic market 561 1.1 Maybank Investment Bank
private placement
30 TASNEE Saudi Sukuk Domestic market 533 1.0 HSBC
Arabia private placement
Top Managers of Sukuk 12 Months Sukuk Volume by Currency US$ (billion) 12 Months
Mandated Lead Arranger US$ (million) No % Top Islamic Finance Related Project Financing Legal Advisors
Ranking 12 Months
1 Public Investment Fund 873 3 8.5
Legal Advisor US$ (million) No %
2 SABB 873 3 8.5
1 Allen & Overy 4,198 2 25.9
3 Arab National Bank 722 2 7.0
2 White & Case 3,579 2 22.1
4 Samba Financial Group 614 3 6.0 3 Skadden Arps Slate Meagher & Flom 3,281 1 20.2
5 Banque Saudi Fransi 475 2 4.6 4 Baker Botts 917 1 5.7
6 Sumitomo Mitsui Financial Group 404 2 3.9 4 Chadbourne & Parke 917 1 5.7
6 Linklaters 684 2 4.2
7 HSBC Holdings 385 2 3.7
7 Baker & McKenzie 417 2 2.6
8 KfW Bankengruppe 369 2 3.6
8 Al-Jadaan & Partners Law Firm 386 1 2.4
9 Mitsubishi UFJ Financial Group 360 1 3.5 8 Cliord Chance 386 1 2.4
10 Standard Chartered 317 3 3.1 8 Saudilegal 386 1 2.4
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