Sovereign Sukuk

The World’s Leading Islamic Finance News Provider

(All Cap) 1200 IFN Monthly Fewer Islamic Indonesia Sovereign 1,162.92 1150 Review: banks in engineers Sukuk: Nigeria 0.67% 1,155.10 1100 Ringing in the Pakistan Zakat index to and Saudi one

1050 new year with expected as serve as global step closer to

1000 signiﬁ cant capitalization benchmark...8 joining the TMSSFTW developments pressures sovereign Powered by: IdealRatings® in December...6 remain...8 club...9 COVER STORY 4th January 2017 (Volume 14 Issue 01) IFN Best Banks Poll 2016: Islamic finance giants return to claim glory alongside fresh faces

fi nancial players worldwide, this year Negara Malaysia (BNM) this year saw one of the best responses ever for emerged triumphant in a very tight race the IFN Best Banks Poll with 26,507 votes as the Best Central Bank for Promoting from individuals all over the world cast. Islamic Finance, displacing last year’s Preserving the quality and independence winner, the State Bank of Pakistan, to of the IFN Awards, this year’s screening second place. process was ramped up employing greater due diligence and a stricter and Caught in the regional wave of volatility more robust screening process. which sent the Malaysian currency plunging to record-low levels, BNM In a year with many unprecedented held its head up high and wasted no and unexpected developments, from time mobilizing measures to bolster The global Islamic fi nance industry has the UK deciding to leave the EU to the the fi nancial community and nation’s spoken! With over 26,000 votes this year, election of Trump as the president of the economy. The departure of Dr Zeti Akhtar the results for the illustrious IFN Best US, in the backdrop of stubbornly low Aziz, one of the most respected central Banks Poll 2016 are fi nally in — and it oil prices and sluggish global economic bankers of the world widely credited is clear from the outcome that Islamic growth, many Islamic fi nance stalwarts as an international champion of Islamic fi nancial institutions worldwide are have demonstrated great resilience in fi nance, in April may have caused some soldiering on amid a very trying year maintaining their grip on being number concerns over the future of Malaysia’s with many shocking and surprising one amid stiff er competition as we Shariah fi nance industry, but those doubts turns politically and economically; at welcome many familiar faces back to the were soon silenced as her successor the same time, we saw the emergence of league of winners. Yet concurrently, we Muhammad Ibrahim, another strong new winners, proving that innovation, also open our arms to greet many new advocate of Islamic fi nance, is proving determination and strategic thinking are names that have turned the tables and his worth. Inheriting a strong legacy, still the names of the game. VINEETA shaken the status quo of the industry with BNM in 2016 made fi ntech a top priority TAN takes us through the victors of the their stunning victories. in driving the Islamic and conventional distinguished IFN Best Banks Awards as fi nance industry forward: it launched honored by their peers. Central bank champions the Investment Account Platform — Proving that a change in leadership the world’s fi rst Shariah compliant Despite massive turbulence in the global did not and would not aff ect its solid bank-mediated fi ntech platform and economic landscape which signifi cantly performance nor dilute its strong set up a fi ntech sandbox to catalyze the impacted the performance of Islamic commitment to Islamic fi nance, Bank continued on page 3 Opening doors to PARTNERPARTNER WITHWITH USUS new opportunities

Contact for more information: Matt Gabriel, Email: [email protected] IFN RAPIDS

Volume 14 Issue 01 Management expands Rajhi Capital as fi nancial DEALS product suite with debut advisor IFN Rapids ...... 2 Nigerian government energy sector-specifi c fund IFN Reports: invites banks, legal fi rms MCB-Arif Habib RATINGS • IFN Monthly Review: Ringing in the new and trustee fi rms to submit Savings and Investments Quill Retail Mall’s Sukuk year with signifi cant developments in December expression of interest for inaugurates Islamic debut sovereign Sukuk gets preliminary ratings • Fewer Islamic banks in Pakistan expected as investment division TRIplc Medical’s senior capitalization pressures remain • Indonesia Central Bank of Bahrain’s Emirates REIT to make Sukuk receives ‘AA1’ BHD26 million (US$ 67.91 interim dividend payment engineers Zakat index to serve as global preliminary ratings from million) Sukuk Ijarah fully of US$11.98 million in benchmark in measuring effi cacy of Islamic alms- RAM subscribed January 2017; to maintain giving • Sovereign Sukuk: Nigeria and Saudi one Kuwait’s Capital Markets semi-annual dividend Jimah East Power step closer to joining the sovereign club ...... 6 Authority considering US$2 distribution maintains ‘AA-IS’ rating on RM8.98 billion (US$2 billion-worth of corporate Habib Modaraba Sukuk and bonds requests; billion) Sukuk Women and Words: Management to transfer working on secondary More jobs for the boys in iCSR? ...... 10 management rights of First RAM maintains good market trading regulation Habib Modaraba to Habib ratings on Malaysia IFN Analyses: Maybank sets up Sukuk Metropolitan Modaraba Airport’s Islamic debt Singapore: Tough 2016 ...... 11 Murabahah program of up Management Company facilities Ratings in Islamic fi nance — criteria upgrades and to RM10 billion (US$2.25 Rahim & Co International MARC affi rms MMC rating changes ...... 12 billion) takes over management of Corporation’s RM1.5 billion Case Study: Shariah compliant KLCC (US$337.99 million) Sukuk REIT Etihad Airways’s maiden Sukuk — The largest NEWS Murabahah program aviation and corporate issuance in MENA ...... 13 Central Bank of Morocco Sabana REIT to acquire 107 Eunos Avenue 3 for Column: allows new Islamic banks MOVES SG$36.1 million (US$25.06 into local markets International Islamic Flip the script: The outlook and predictions for million) Islamic fi ntech in 2017 and beyond ...... 14 People’s Bank of Liquidity Management Zanzibar signs banking Citigate International Corporation appoints IFN Country Correspondents: tech agreement with ICS raises US$10 million for Godwin Emefi ele as Russia; Indonesia; Qatar; Maldives; Turkey; Financial Systems Islamic fund investing in chairman diamond mining projects in Kuwait; Hong Kong ...... 15 Venkat Chandrasekar International Islamic Trade Africa IFN Sector Correspondents: Finance Corporation to becomes Al Rayan Bank’s Private Equity & Venture Capital; Takaful & support African Countries Pak Brunei Investment COO Company to divest 70% Re-Takaful; Financial Institutions and Corporate Raja Teh Maimunah to joint Christian Association of shareholding in Primus AmBank Group Sukuk; Sovereign Sukuk ...... 19 Nigeria urges country’s Investment Management Special Report: withdrawal from Gulf Bond and Sukuk International Islamic Islamic fi nance and UN Sustainable Development TAKAFUL Association appoints senior Liquidity Management executives of Emirates Goals: A regulatory perspective ...... 21 Corporation National Disaster NBD as chairman and Country Feature: Bank Indonesia to increase Management Center and acting vice-chair of regional Islamic fi nance can aid in reviving the Syrian Islamic fi nance market Ayady Takaful launch new board Takaful scheme economy post-war ...... 23 share by collaborating with Alawwal Bank announces Sector Feature: Islamic schools; expects Pos Malaysia partners with return of chairman and vice to implement program Robust rating prospects for Islamic fi nance into Etiqa Takaful to off er Pos chairman; board members roadmap in 2017 Khairat Takaful appointed the next decade ...... 24 Islamic bankers propose Arab Islamic Company for National Takaful Co multicurrency Sukuk for Takaful Insurance launched chairman resigns Islamic Finance news ...... 25 China Pakistan Economic Deal Tracker ...... 35 Corridor projects GlobeMed inks third party Ahmad AlKazemi becomes administration agreement the new general manager of REDmoney Shariah Indexes ...... 36 with Egyptian Takaful Kuwait International Bank Eurekahedge Funds Tables ...... 38 ASSET Insurance Company Audit Oversight Board of Dealogic League Tables ...... 40 MANAGEMENT Solidarity announces Pakistan welcomes new REDmoney Events ...... 44 Sanah Al Wakalah contract chairman and members Subscription Contact...... 44 Al Meezan Investment termination; appoints Al-

Disclaimer: IFN invites leading practitioners and academics to contribute short reports each week. Whilst we have used our best endeavors and eﬀ orts 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.

IFN Best Banks Poll 2016: Islamic fi nance giants return to claim glory alongside fresh face Continued from page 1 development of fi ntech. The central bank league. Voted as the Best Islamic Retail Syria) and Yemen (Winner: Islamic Bank also focused on building international and Bank in 2015, Meezan Bank also tied of Yemen; Runner-up: Saba Islamic Bank). regional partnerships, signing bilateral with ADIB as the runner-up for Most MoUs with another solid Islamic fi nance Innovative Islamic Bank; after coming in The status quo was nonetheless disrupted player, Indonesia and also Thailand. second in 2015, Dubai Islamic Bank (DIB) in other Gulf markets. In Kuwait, Al Rajhi was crowned champion in this innovation Bank Kuwait for the fi rst time made it to The SBP came in as a runner-up for the category. DIB, with its customer-centric the top-two list — grabbing second place in central bank category, but only by a approach, also fl exed its muscles running the Best Islamic Bank in Kuwait category; very small margin. Introducing a slew ahead of CIMB Islamic to clinch the title of but huge applause goes to winner Kuwait of supportive measures for the Islamic Best Islamic Retail Bank. Finance House which, for the 12th year banking industry including establishing running (since the IFN Best Banks Poll was four Islamic fi nance subcommitt ees to The year 2016 has witnessed massive launched in 2005!), has been selected as increase the sector’s reach and allowing shake-ups across multiple sectors with Kuwait’s most premier Shariah bank by Islamic banking branches of conventional new names to the fore: Islamic Finance IFN readers worldwide. A record-breaking banks to set up a separate Pakistan Real- House, based in the UAE, was voted and outstanding achievement! Moving on Time Interbank Sett lement Mechanism as the Best Islamic Leasing Provider, to Lebanon: despite its national economy in a bid to optimize the effi ciency of the a strong win in its IFN Best Banks Poll suff ering from crises within and beyond its fi nancial services of the banking system, debut; while Sri Lanka’s Al-Falaah, the borders, Arab Finance House managed to the Pakistani central bank is unwavering Islamic Business Unit of LOLC Finance, pip former champion Al Baraka Lebanon in its dedication to increase the market moved up the ranks from third place in to the post to win Best Islamic Bank in share of Islamic banks — the SBP is 2015 to second place in 2016. It has indeed Lebanon. Bank Mellat is living up to its indeed deserving to be one of the top been a good year for Al-Falaah which has name as the ‘Bank of the Nation’ as it wins central banks in the world in promoting also been recognized as the second Best Best Islamic Bank in Iran, outstripping Islamic fi nance. Islamic Bank in Sri Lanka. 2013 winner Bank Melli Iran by over 50% in votes. The Best Islamic Bank in Jordan Sector stalwarts Winning gold in the Best Islamic award once again goes to Jordan Islamic The strong support of these central banks Private Bank category for the second Bank which won by a comfortable margin are yielding positive results as Malaysian consecutive year, ADIB continues to over Islamic International Arab Bank and Pakistani Islamic banks dominate wow its customers by enhancing its which saw itself move up the polls from the table of sector winners this year. off erings by expanding its product suite third place in the previous year. Malaysian heavyweight CIMB Islamic and upgrading its IT infrastructure. From bagged multiple awards including Best third place, Maybank Islamic climbed the Flying off to Asia, we saw household Private Equity House for the second ladder this year grabbing second place in names like Bank Muamalat Indonesia consecutive year and beating Qatar First this category. (Runner-up: Maybank Syariah) winning Bank to the top by a comfortable margin. the Best Islamic Bank in Indonesia CIMB Islamic Bank was the runner-up Country leaders award again; Bank Islam Brunei for the categories of Best Islamic Retail Leading Islamic banks continue to hold Darussalam in a landslide victory Bank (fi rst time being recognized in their ground in the domestic landscape maintains its position as the Best Islamic this global category) and Best Islamic but 2016 has also unveiled surprising Bank in Brunei (Runner-up: Maybank); Bank for Treasury Management. CIMB new winners, a sign of rising healthy in an extremely tight race — possibly Islamic also once again was voted as competition. the tightest we’ve ever seen! — CIMB the Best Islamic Bank in Malaysia, Islamic managed to outdo Maybank demonstrating it strength both in the local In the Middle East, several countries Islamic (only by a hair’s breadth) to win and international markets. CIMB Islamic saw the return of 2015’s victors asserting Best Islamic Bank in Malaysia. Bank Trustees proved that it is the undisputed their dominance with their expansive of Tokyo Mitsubishi UFJ takes home Best Islamic Trustee/Custodian of the network, innovative products and the title of Best Japanese Islamic Bank year, winning it three times in a row; excellent customer service. These nations (Runner-up: Sumitomo-Mitsui Banking Malaysia’s AmanahRaya Trustees came in include Bahrain (Winner: Bahrain Islamic Corporation); and in Thailand, despite the second. Bank; Runner-up: Al Baraka Islamic great challenges faced by the Islamic Bank Bank), Oman (Winner: Meethaq Islamic of Thailand in grabbing market share In terms of treasury management, this Banking by Bank Muscat; Runner-up: and turning profi ts, voters seem to be year the industry voted Asian institutions Bank Nizwa), Saudi Arabia (Winner: Al optimistic of the state-owned bank’s major to the top, changing last year’s GCC- Rajhi Bank; Runner-up: Arab National overhaul and debt restructuring strategy, focused dynamics. Pakistan’s Meezan Bank), Qatar (Winner: Qatar Islamic Bank; as they again voted it as the Best Islamic Bank took home the crown as the Best Runner-up: Qatar International Islamic Bank in Thailand (Runner-up: CIMB). Islamic Bank for Treasury Management Bank), the UAE (Winner: DIB; Runner- by a large margin; together with runner- up: ADIB), Palestine (Winner: Palestine The South Asian region is characterized up CIMB Islamic, they both ousted Islamic Bank; Runner-up: Arab Islamic by repeated winnings — an encouraging Middle Eastern giants Abu Dhabi Islamic Bank), Syria (Winner: Syrian International trend testifying to the strength and Bank (ADIB) and Al Rajhi Bank from the Islamic Bank; Runner-up: Albaraka Bank continued on page 4

IFN Best Banks Poll 2016: Islamic fi nance giants return to claim glory alongside fresh face Continued from page 3 dominance of these major players. The Best Islamic Bank in the US goes awards across diff erent categories, Unsurprisingly, mammoth Islami Bank to Michigan-based University Islamic illustrating its enviable strength as an Bangladesh won again, for the 9th time, Financial (UIF). Delivering impressive issuer, investor and retail player. The the Best Islamic Bank in Bangladesh results in 2016, UIF set a new record IFN’s 2016 Best Overall Islamic Bank award, far ahead of runner-up ICB originating over US$200 million of award goes to Dubai Islamic Bank yet Islamic Bank. In Pakistan, the country’s fi nancings in the third quarter and passed again! Winning the title for the second largest Islamic bank, Meezan, deservingly the US$1 billion of fi nancings threshold consecutive year, DIB’s 2016 IFN Awards bagged the Best Islamic Bank in Pakistan since inception. This year, IFN welcomes stable also includes Best Retail Islamic award for the 10th time (Runner-up: Al runner-up Guidance Residential to the list Bank, Most Innovative Islamic Bank Baraka Pakistan); while Amana Bank is of top US Islamic banks for the fi rst time, and Best Islamic Bank in the UAE. An awarded Best Islamic Bank in Sri Lanka which beat mainstays Lariba and Devon extremely well-deserved win and IFN for the sixth time (Runner-ups: Muslim Bank in the polls. extends its heartiest congratulations Commercial Bank — MCB Islamic to this global Islamic fi nance pioneer! Banking Division and LOLC Finance’s Zooming into Africa, the Albaraka Congratulations are also in order for Al-Falaah). brand continues to exert its presence runner-up CIMB Islamic Bank and second in all corners of the world: Al Baraka runner-up Abu Dhabi Islamic Bank for Moving farther afi eld, there’s been a fl ip Bank Sudan adds yet another trophy this coveted accolade. in standings as Muslim Community Co- (fi fth) to its collection this year as Best Operative Australia overtakes Amanah Islamic Bank in Sudan (Runner-up Arab It is indeed a privilege to honor all the Islamic Finance Australia as the Best Sudanese Bank appears on the list for the winners of the IFN Best Bank Poll 2016, Islamic Bank in Australia. Similarly in fi rst time); the Egyptian arm of Albaraka which have showcased great fortitude, Turkey, Al Baraka Turk Katilim Bankasi, wins Best Islamic Bank in Egypt again creativity and strength the past 2015’s runner-up, displaced Turkiye (Runner-up: Faisal Islamic Bank of Egypt) tumultuous 12 months with each leaving Finans Katilim Bankasi, which sett led for and Albaraka also steals the show in an indelible mark on the global Islamic second spot this year, to become the Best South Africa with yet another consecutive fi nance and banking landscape — we Islamic Bank in Turkey. win (Runner-up: FNB Islamic Finance). thank and commend you for your In Kenya, Gulf African Bank leapfrogged excellent service and performance and are In any institution, a transition in from third place to fi rst as Best Islamic proud to recognize your contributions. power may present itself as a hiccup in Bank in Kenya (Runner-up: First operations; likewise 2016 was a year of Community Bank). major management changes for the Bank Garnering overwhelming response of London & The Middle East; however, which requires extra due diligence, the Islamic bank’s strong fundamentals Best of the best screening and evaluation, the full and clear strategy continue to steer the And fi nally, saving the best for last, in results of the IFN Deals of the Year bank to be honored as the Best Islamic one fell swoop, this bank again proves Awards will now be announced in Bank in the UK, a position it has been its worth, even more so during a year th holding since 2009. Masraf Al Rayan again fl ooded with uncertainty and economic the upcoming issue of IFN on the 11 emerged as the runner-up. headwind as it goes on to win multiple January.

Best Islamic Bank by Sector BEST OVERALL ISLAMIC BANK 1st: Dubai Islamic Bank* 2nd: CIMB Islamic Bank; 3rd: Abu Dhabi Islamic Bank BEST CENTRAL BANK IN PROMOTING ISLAMIC FINANCE 1st: Bank Negara Malaysia 2nd: State Bank of Pakistan BEST ISLAMIC LEASING PROVIDER 1st: Islamic Finance House 2nd: Al-Falaah, Islamic Business Unit of LOLC Finance BEST ISLAMIC PRIVATE BANK 1st: Abu Dhabi Islamic Bank* 2nd: Maybank Islamic BEST ISLAMIC RETAIL BANK 1st: Dubai Islamic Bank 2nd: CIMB Islamic Bank MOST INNOVATIVE ISLAMIC BANK 1st: Dubai Islamic Bank 2nd: Abu Dhabi Islamic Bank & Meezan Bank BEST ISLAMIC TRUSTEE/CUSTODIAN 1st: CIMB Islamic Trustee* 2nd: AmanahRaya Trustees BEST ISLAMIC BANK FOR TREASURY MANAGEMENT 1st: Meezan Bank 2nd: CIMB Islamic Bank BEST PRIVATE EQUITY HOUSE 1st: CIMB Islamic* 2nd: Qatar First Bank* Note: Red, Bold: winner; * Repeat winner

Best Islamic Bank by Country

INDIAN SUBCONTINENT EUROPE BANGLADESH TURKEY Islami Bank Bangladesh* Al Baraka Turk Katilim Bankasi ICB Islamic Bank* Turkiye Finans Katilim Bankasi PAKISTAN UK Meezan Bank* Bank of London & The Middle Al Baraka Islamic Bank East* SRI LANKA Masraf Al Rayan Amana Bank* Muslim Commercial Bank- MCB Islamic Banking Division* Al-Falaah (Islamic Business Unit of LOLC Finance)

THE AMERICAS US University Islamic Financial* Guidance Residential

MIDDLE EAST BAHRAIN Bahrain Islamic Bank* Al Baraka Islamic* IRAN Bank Mellat* Bank Melli Iran AFRICA JORDAN EGYPT Jordan Islamic Bank* Al Baraka Bank (Egypt)* Islamic International Arab Bank Faisal Islamic Bank of Egypt KUWAIT KENYA Kuwait Finance House* Gulf African Bank Al Rajhi Bank (Kuwait)* First Community Bank LEBANON SUDAN Arab Finance House Al Baraka Bank Sudan* Al Baraka Lebanon Arab Sudanese Bank OMAN SOUTH AFRICA BankMuscat* Al Baraka Bank* Bank Nizwa* FNB Islamic Finance PALESTINE Palestine Islamic Bank* Arab Islamic Bank* QATAR Qatar Islamic Bank* Qatar International Islamic Bank* SAUDI ARABIA Al Rajhi Bank* Arab National Bank* SOUTHEAST ASIA SYRIA Syrian International Islamic BRUNEI Bank* Bank Islam Brunei Darussalam* Albaraka Bank Syria* Maybank* UAE INDONESIA ASIA PACIFIC Dubai Islamic Bank* Bank Muamalat Indonesia* Abu Dhabi Islamic Bank* Maybank Syariah* AUSTRALIA YEMEN MALAYSIA Muslim Community Co-Operative Australia Islamic Bank of Yemen* CIMB Islamic Bank* Amanah Islamic Finance Australia Saba Islamic Bank* Maybank Islamic* JAPAN THAILAND Bank of Tokyo Mitsubishi UFJ* Islamic Bank of Thailand* Sumitomo-Mitsui Banking Corporation* CIMB*

Note: Red, Bold: Winner; Unbold: Runner-up; *: Repeat winner

IFN Monthly Review: Ringing in the new year with signiϐicant developments in December

Welcome to the ﬁ rst edition of our monthly global analysis for 2017, a comprehensive review of what’s been happening across the world’s Islamic markets over the past four weeks. December witnessed a number of interesting developments with a surge in oil prices along with steady Sukuk issuance and exciting news from across the banking markets. DANIAL IDRAKI brings you the round-up of the latest news.

2016 was indeed a turbulent year for the ﬁ nancial markets, and December wrapped up with key developments that would shape how the markets will operate in 2017. The Federal Reserve raised interest rates on the 14th December, which was only the second time in a decade since the housing crisis in the US reverberated throughout the world. Major oil-producing countries ﬁ nally came to an agreement on oil production to BDT1.67 billion (US$20.58 million). raise approximately US$1 billion through after Saudi Arabia and Iran, two main Supranational bodies have also been a Sukuk issuance due 2039, which is players in the energy sector and members rather active toward the end of the year, rated ‘(P)Baa3’ with a stable outlook by of OPEC, signed a deal during a meeting with the International Islamic Liquidity Moody’s Investors Service. in Vienna to reduce output. Management Corporation’s US$500

million three-month tenor Sukuk facility In Malaysia, the Federal Land Deals at a profi t rate of 1.35% oversubscribed Development Authority is looking to Sovereign activity continues to refl ect after receiving a total of 10 bids. fi nance its 37% stake acquisition in much promise, and Morocco plans to Indonesia’s Eagle High Plantations issue its fi rst-ever sovereign Sukuk in the Over in Kuwait, the National Bank of through a mix of Sukuk issuances domestic market in the fi rst half of 2017. Kuwait and KAMCO were invited by and loans, according to The Star. According to Morocco’s fi nance minister, the Public Debt Offi ce to participate Approximately 50% of the fund, worth Mohamed Bossaid, the size of the in a sovereign bond issuance. The RM2.26 billion (US$503.8 million), will issuance is yet to be decided though it government plans to issue US dollar be fi nanced by a loan from a European will coincide with the launch of a market denominated bonds amounting to US$10 bank while the remaining fund would be for Islamic banking after the country billion, both conventional and Sukuk, to from a Sukuk issuance. Maxis Broadband adopted legislation allowing Shariah reduce defi cits for the fi scal year ending also issued its third Sukuk Murabahah compliant fi nance into the domestic on the 31st March 2017. amounting to RM2.45 billion (US$549.75 market. million). On the corporate front, Al Baraka Saudi Arabia, meanwhile, plans to issue Banking Group is planning a Tier 1 Banking Sukuk in the fi rst quarter. According capital-boosting Sukuk worth US$300 December also saw an active period of to Bloomberg, the sovereign has begun million in the fi rst quarter of 2017, and Islamic fi nancing, rights issuance and discussing with banks on the potential is currently in the midst of discussing merger approval. The National Shipping sale. with a number of banks about arranging Company of Saudi Arabia signed a the Islamic debt facility. Having sold syndicated Murabahah facility agreement Malaysia’s GII Murabahah continue to a US$368 million Sukuk privately and worth US$350 million with a number of be oversubscribed after the RM1.5 billion a QAR2 billion (US$548.76 million) banks, while Ezdan Holding in Qatar (US$338.34 million) off ering received additional Tier 1 perpetual Sukuk facility received a US$460 million Islamic 272 bids worth a total of RM5.63 billion in September last year, Qatar Islamic syndicated fi nancing facility for a period (US$1.27 billion), while Brunei issued its Bank has no immediate plans to issue of eight years. 140th series of short-term Sukuk Ijarah. more Sukuk, according to its CFO, Bangladesh also saw an active month Gourang Hemani. In Kuwait, Salhia Real Estate signed after the government issued its six-month two Islamic credit facility agreements Islami Investment Bond (BGIIB), which In Saudi Arabia, international power and consisting of a KWD15 million (US$49.1 received a total of eight bids amounting water company ACWA Power is set to

million) nine-year term facility and a facilitate the creation of a broader range Growth Fund, the Public Islamic KWD14.5 million (US$47.46 million) of saving, hedging and diversifi cation Asia Leaders Equity Fund and Public eight-year term facility with separate products. Islamic Mixed Asset Fund registered Islamic banks. Emirates Islamic, distributions of 0.25 sen (0.056 US cent), meanwhile, launched a AED1.5 billion Shortly after the standard was 0.15 sen (0.034 US cent) and 0.4 sen (0.09 (US$408.29 million) rights issue to boost announced, a number of entities made US cent) respectively. its capital. their bid in the Islamic gold investment space. Kuala Lumpur-based fi ntech fi rm, In Singapore, Shariah compliant Sabana In the UAE, shareholders of National HelloGold, the fi rst online gold platform REIT has entered into a conditional Bank of Abu Dhabi (NBAD) and First to be endorsed as Shariah compliant by put and call option agreement with Gulf Bank (FGB) approved a proposed Amanie Advisors, confi rmed that it is Singapore Handicrafts in relation to merger of the two banks involving a expanding beyond Malaysia to include the proposed acquisition of a property share swap, in which FGB shareholders other ASEAN markets in the second worth approximately SG$20.9 million will receive 1.25 NBAD shares for each half of 2017, while in the European (US$14.44 million). Furthermore, the FGB share they hold. market, French Takaful specialist SAAFI company entered into a conditional launched a physical gold investment sale and purchase agreement with X Performance product, in collaboration with INAIA. Properties for the proposed divestment December was a boost to the global Over in Ireland, GoldCore began of a property worth SG$148 million markets after OPEC members pledged working on a Muslim-friendly gold (US$104.19 million), which is expected to to cut production by about 4.5% or 1.2 investment solution with plans to be completed by the fi rst quarter of 2017. million barrels per day, the fi rst cut in introduce it to the market by the fi rst eight years. Oil prices soared to more quarter of 2017. In a setback to South Africa-based than 8% to reach nearly US$50 a barrel PSG Melrose Arch, an investment after the announcement was made. Besides fi nancial institutions, regulators management and fi nancial services around the world are also leveraging fi rm, its Offi cial Shariah Certifi cation The S&P Global BMI Shariah Index on the new standard after Dubai was revoked and terminated after the saw a rather steady month, after it rose Multi Commodities Center and Borsa fi rm failed a periodic Shariah audit and slightly to 121.67 as at the 30th December Istanbul signed an MoU to work toward refused to grant access to the fi nancial from 120.24 from a month earlier, while establishing an international Shariah documents, processes and records of the index’s one-year performance saw a compliant precious metals platform. With clients signed with the Islamic division. rise of 6.2% to close the year on a more the new Shariah standard on gold and its Over in the GCC, Shuaa Capital, positive note. Its conventional twin, trading controls opening the fl oodgates a fi nancial services fi rm, bought a meanwhile, saw an upward shift of 2.15% to further gold investment in the Islamic 14.01% stake in its subsidiary, Khaleeji at the end of December to reach 210.79. fi nance universe, more collaboration Commercial Bank (KCHB). between international market players are The S&P Developed BMI Shariah Index expected to come to the fore in the global Moves also rose a marginal 1.37% to reach commodities trading arena. December was also a month of major 127.42, although the S&P Emerging BMI movements across the board. At the Shariah Index saw a slight dip to 75.08 Asset management International Islamic Liquidity from 75.74 a month earlier. The Middle Islamic asset management saw a slew of Management Corporation, Professor Dr East closed the year on a high after the exciting developments over the past four Rifaat Ahmed Abdel Karim has stepped S&P Pan Arab Composite Shariah Index weeks, with one of the most signifi cant down as CEO after four years helming rose 4.08% to reach 120.6 at the end of being the collaboration between the institutions; Godwin Emefi ele, the December, although the S&P Pan Asia Malaysia Venture Capital Management governor of the Central Bank of Nigeria, Shariah Index went in the opposite (MAVCAP) and Silicon Valley-based was appointed as IILM’s new chairman; direction after losing 2.34% over the Elixir Capital to set up and operate the Raja Teh Maimunah, currently the CEO month. Africa ended the year with Global Islamic Economic Fund, targeting of Hong Leong Islamic Bank, will be much optimism after the S&P Pan Africa up to US$250 million for the Islamic joining AmBank Group in April; Gulf Shariah Index rose 6.1% to reach 91.63 as innovative ecosystem. Elixir Capital’s Bond and Sukuk Association appointed at the 30th December. managing director, Amir Azahar, Emirates NBD’s managing director and confi rmed with IFN that the new Islamic global head of debt origination and Collaboration and fund will make allocation for start-ups distribution, Andy Cairns, as the new in OIC countries, with Malaysia and chairman of the GBSA Regional Board, development Indonesia being the prime focus. while Anita Yadav, the senior director for The Islamic fi nance industry welcomed global markets and treasury and head of the long-awaited Shariah standard on Public Mutual declared distributions fi xed income research of Emirates NBD, gold after it was launched by AAOIFI of more than RM95 million (US$21.28 has been appointed as the acting vice- and the World Gold Council. The million) for nine funds for the fi nancial chair; Al Rayan Bank named Venkat standard will, for the fi rst time, set year ended the 30th November, with the Chandrasekar as its new COO; and specifi c rules for the use of gold as Public Islamic Infrastructure Bond Fund Khaleeji Commercial Bank confi rmed an investment in the Islamic fi nance registering the highest gross distribution that its board member, Mohamed Barrak industry and will also open up a new of four Malaysian sen (0.9 US cent) per Al Mutair, has resigned eff ective 25th investment asset class, enabling Islamic unit while the Public Islamic Alpha-40 December 2016. banks and fi nancial institutions to

Fewer Islamic banks in Pakistan expected as capitalization pressures remain

VINEETA TAN writes that Pakistan which has laid out aggressive expansion will see the number of fully-fl edged This inorganic plans over the next fi ve years including Islamic banks wind down as Shariah in Egypt, Sudan and Morocco. ABPL, banks are left with few choices but to growth trend itself a product of the merger with merge with their competitors as they Emirates Global Islamic Bank, has 135 continue to struggle with insuffi cient will carry on for branches; the successful consolidation of funding to support their operations. ABPL and Burj Bank will create a single the foreseeable Islamic bank under the Al Baraka brand The Republic, home to six fully-fl edged with total assets of more than US$1.1 Islamic banks and 16 conventional future as there is a billion and a branch network of 224 in banks off ering standalone Islamic over 100 cities across Pakistan. banking branches (as at the end of clear preference for September 2016), has been experiencing stand-alone Banking sources att ribute this M&A a strong wave of Islamic banking undercurrent to both the mergers and acquisitions (M&A). Just Islamic banks undercapitalization of Islamic banks and recently, it was confi rmed that the State strong potential for Shariah banking in Bank of Pakistan has approved the sale (US$189.33 million) in deposits, has the domestic market fuelling of Burj Bank by Bahrain’s Bank Alkhair been a hot target for acquisition, having conventional lenders to foray into this to Al Baraka Bank Pakistan (ABPL) been approached by six diff erent segment through acquiring existing while earlier in the month, MCB Bank institutions including conventional players. This inorganic growth trend, and NIB Bank agreed on amalgamating lenders Summit Bank, which had industry participants believe, will carry their operations through a share swap hoped to facilitate its conversion into a on for the foreseeable future as there is a arrangement. fully-fl edged Shariah bank through the clear preference by the public for acquisition, and Bank of Khyber. ABPL stand-alone Islamic banks over Islamic Burj Bank, a relatively small bank with on the other hand is part of the Bahraini banking windows when Shariah 74 branches and over PKR20 billion Islamic banking group giant, Al Baraka, banking needs are concerned.

Indonesia engineers Zakat index to serve as global benchmark in measuring efϐicacy of Islamic alms-giving

Indonesia is taking the lead in sett ing a global precedent for Islamic alms management with the launch of a fi rst-of-its-kind index to measure the eff ectiveness of Zakat in alleviating and improving social welfare, the latest move by President Joko Widodo’s government to elevate the Republic’s Islamic fi nance standing in the international arena. VINEETA TAN reports.

Until recently, the Islamic world lacked a standard benchmark to map the progress and effi cacy of Islamic alms- giving; Badan Amil Zakat Nasional (BAZNAS), or the National Islamic Professor Dr Bambang Sudibyo, the This is not the fi rst step Indonesia has Alms Management Agency of Indonesia chairman of BAZNAS, who is also the taken to bett er utilize Zakat as an asset intends to fi ll that gap with the National former fi nance minister of Indonesia. class; Bank Indonesia is understood to be Zakat Index. exploring ways to securitize Sukuk To be implemented in the fi rst quarter against the Republic’s Zakat and Waqf “Until now there has been no standard of 2017, this systematic computation assets and to utilize subsequent proceeds measurement tool that can measure model utilizing both quantitative and to fi nance Islamic economic activities. the performance and progress of Zakat qualitative methods could be most useful The central bank in May also issued an at national and international levels. in closing the data gap in the Zakat international set of core principles on In fact, such measurement is very realm and assisting in the formulation of Zakat, in collaboration with the IDB and important in determining the success of eff ective policies to reduce management BAZNAS. Zakat distribution and use,” explained ineffi ciency.

Sovereign Sukuk: Nigeria and Saudi one step closer to joining the sovereign club

The new year looks to be off to a good Upcoming sovereign Sukuk start with a healthy dose of activity in the sovereign Sukuk space, while Country Amount Expected date Nigeria is hard at work as it plans to issue its maiden off ering this year. Saudi Arabia TBA 2017 DANIAL IDRAKI brings you the latest developments across the sovereign Morocco TBA First half 2017 Sukuk market. Bahrain TBA First quarter 2017 Nigeria Oman US$2 billion TBA Nigeria’s Debt Management Offi ce Iran IRR60 trillion 2016 (DMO) has announced that the country is seeking advisers and trustee fi rms to Nigeria TBA First quarter 2017 organize and manage its debut sovereign Sukuk. This initiative comes as an eff ort Egypt TBA 2016 to establish funding and reduce budget defi cits. The DMO also stated that Kazakhstan TBA 2016 th the bids are to be submitt ed by the 9 Kenya TBA 2016 January 2017. Issuance of a sovereign Sukuk is part of a plan by Nigeria to South Africa TBA 2016 develop alternative sources of funding and to establish a benchmark curve. Bangladesh TBA TBA Hong Kong US$500 million to US$1 billion TBA Saudi Arabia Saudi Arabia was reported to have Ningxia Hui Autonomous Region US$1.5 billion TBA discussed with banks on a possible Niger XOF150 billion TBA Sukuk sale in the fi rst quarter. According to Bloomberg, the sovereign is Luxembourg TBA TBA considering tenors of seven and 16 years, although no defi nitive size or timing has Tunisia US$500 million TBA been decided yet. UAE TBA TBA

Malaysia Shandong Province CNY30 billion TBA The government of Malaysia will issue a RM3.5 billion (US$779.96 million) Sindh Province US$200 million TBA government investment issue (GII) Kuwait KWD5 billion TBA Murabahah facility with a proﬁ t rate of th 4.79% on the 6 January 2017. The facility Maldives TBA TBA will mature on the 3rd March 2020, and BNM may purchase up to 10% of the Sri Lanka US$1 billion TBA issuance size. Germany US$1 billion TBA Bahrain nd The Central Bank of Bahrain (CBB) subscribed. Maturing on the 22 March series. The CBB also issued BHD26 announced that its December Sukuk 2017, the expected return for the 91-day million (US$68.47 million)-worth of th Salam issuance worth BHD43 million paper is 2.05%. The issuance is the 188 Sukuk Ijarah; the facility was fully (US$112.37 million) has been fully of the CBB’s short-term Sukuk Salam subscribed.

The World’s Leading Islamic Finance News Provider

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Everyone knows the story ofo Indonesia. 13th April 2016 ( It is one of the world’s biggestbigges Volume 13 Issue 15) potential markets for IslamicIsla f and the most populous global Muslim practical top-down approach from the To receive the latest updates on the global Islamic nation, but e mic ę nance authorities while Indonesia has evolved into practicalě growth orts to translateof IslamicI thist assets along more grass roots lines with a have stumbled. Last week, industry laissez-faire regulatory regime. Between Indonesia need to reach equality in leaders gathered in JakartaJakartslamic to discuss 2002-09, Islamic banking in Indonesia terms of cost, tax and regulation before the opportunities and challengeschal indu facing grew at around 50% per year, while this phase can be reached. Yet this Southeast Asia’s largest economy.a to dis from 2009-15 growth continued at an objective could soon be within reach. With a new proactive approachapprolenges from average rate of 23% a year and in 2015 While previously government support the authorities, relaxed r economy this growth fell to around 8%, explained has been limited, it looks as if the and a determinationrelaxed for regulationscollaboration,co ach fro Imam Teguh Saptono, the president authorities h LAUREN MCAUGHTRY egulationssuggests that director of BNI Syariah, speaking on and are readyave to makerecognized a change this in need their it could llaborati the panel ‘Future Forward: Charting approach. “Until now, Islamic ę shine. nally be Indonesia’s time to a New Direction for Islamic Financial Indonesia has been mostly driven by the t Institutions’. people and the industry. But now we are t ę nance in “Islamic creating a National Commi small comparedę nance toin theIndonesia totaltota market is stillsti — very “This suggests that the existing strategy be chaired by the president himself,” Ĵ ee that will the market share is only arounda 5%,ll ve is not enough to maintain growth and conę rmed Dr Sofyan. which is much less than achievedl market by — help us grow market share,” he noted. Malaysia and other countries.countriround Given 5%, “We have sat at 4-5% market share for Government push our Muslim majority, Indonesia has a the last few years and we are going ﬁ nance industry, register for the IFN Daily Alerts at It is expected that within two months es. Given very small share in Islamic nowhere. It is time for us to the new National Commi commented Dr Sofyan Djalil,Djalil the make a breakthrough.” Islamic Finance will be in place, and the ę minister for national developmentdeve nance,” authorities are keen to collaborateĴ ee for with planning and head of the NationalN , the “Indonesia is still at the the industry, liaise with domestic Development Planning Agency,Agenclopment normalizing stage,” speaking at the IFN Asia Forumational 2016. commented Rafe practitioners and learn from “But if you look at it in terms ofy, account Haneef, CEO of CIMB international representatives to numbers, we have a lot of people — a Islamic, speaking at the promote Islamic terms of account lot of small accounts and micro same event. “The next and kick-start its ęprogress. nance growth In numbers it is big.” people — a stages is the performance micro ę nance. stage,st where you start “The potential for Islamic Top down, bottom up growinggr once you ę nance in Indonesia is huge, and our role is to unlock that It is widely suggested thattha the success haveha reached a level-playinglev potential and make it into of Malaysia has been drivendrive by its t the success ę eld.”el Islamic reality — we want to translate n by its ę nancialna it into market share, meet operationsoper in the demand for Islamic ę nancial services and www.islamicfinancenews.com give people more choice,” PARTNERPARTNE WITH US said Dr Sofyan. ERR R continued on page 3 WWIWITITTTHHUH U Opening doors to Contact for more in t forr mo moreree inn formation:foformmamattio François-Xavier Chenhalls-Walker Email:new opportunities ion:: Fraançois-

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By Laura Elder, a cultural anthropologist screeners and decision-makers for who teaches in the Department of Global CSR funds. As reported by these Female Studies at Saint Mary’s College in Notre women, they were assigned CSR Dame. Her primary research interests are roles in particular because their male Shariah global political economy, Islam and gender. colleagues assumed that they had She can be contacted at lauraeveelder@ more expertise in social development advisors are more gmail.com. because of their ‘mothering’ expertise. At the other end of the spectrum, often designated Corporate social responsibility (CSR) is among receivers of CSR rather than meant to support social development among fi nanciers, banking and fi nance by their male initiatives. Of course, depending institutions have become similarly on the tax regime, CSR may also be interested in harvesting women’s colleagues as lead particularly important in relation to social expertise in microfi nance reducing tax liabilities. But, focusing guarantee programs. Many analysts screeners and on social development goals for Islamic have labeled microfi nance initiatives fi nance, AAOIFI has designated predatory because there is decision-makers fi ve mandatory disclosure often an explicit transference requirements for CSR of risk and responsibility for CSR funds including elucidating onto women and women’s policies for screening networks. For example, because their male and dealing with clients, banks often outsource loan statement of earnings repayments to women’s colleagues assumed and expenditure groups as women’s prohibited by Shariah, consistency in paying that they had employee welfare and back and managing the Zakat. But, according to group’s fi nances reduces more expertise in the recently released 2016 administration costs for social development Islamic Finance Development fi nancial institutions. In Indicator Report, most Islamic this way, women’s social because of their fi nance institutions are not expertise and networking disclosing this information on are taken for granted and ‘mothering’ their CSR initiatives. remain unrewarded. expertise CSR programs and initiatives also In both of these cases, both reveal interesting intersecting iCSR and microfi nance, the Certainly, this is not a problem peculiar assumptions about women’s fundamental issue is that to Islamic fi nancial institutions; empowerment, expertise and without adequate disclosure however, I suggest that CSR disclosure social function. For example, Shariah of a fi nancial institution’s is a particularly potent place to advisors have repeatedly told methodologies for screening, begin working toward transparency. me that female Shariah advisors dealing and payments, it will Otherwise, both giving and receiving are more often designated by never be possible to evaluate iCSR may result only in more their male colleagues as lead social development initiatives. unrewarding work for women.

Singapore: Tough 2016

The Singaporean Islamic fi nance market has for years struggled to gain traction due to a variety of factors including weak political will to develop the industry, the absence of a sizeable Muslim population and the strength of its conventional fi nance market and it seems the Lion City had a tougher time pushing the proposition in 2016 as global economic pressures weigh heavily on the country. VINEETA TAN provides an overview of the Shariah fi nance landscape of the Asian tiger.

Regulatory environment following the 2015 announcement that activities has been att ributed to the great Rather than incentivizing market the country’s sole fully-fl edged Shariah comfort of issuers with conventional participants to encourage Islamic fi nance bank, the Islamic Bank of Asia (IB Asia), facilities and the lack of incentives to activities, Singapore’s approach diff ers will shutt er its operations due to its pursue Islamic debt. from neighboring Malaysia in that it failure in generating economies of scale. applies non-preferential treatment to This is despite Shariah banking assets in Asset management create a level-playing fi eld for both Singapore growing 73% since 2010 and While Singapore’s Shariah banking and conventional and Islamic fi nance. Islamic the number of banks involved in Islamic Sukuk segments may not be up to par, fi nance and banking are governed under banking doubling to 15 over the fi ve- however, Asia’s Switz erland is well the same regulation, the Banking Act, year period since then. IB Asia’s parent positioned to leverage its sophisticated which treats Shariah compliant fi nance DBS Group Holdings, however, has said wealth management expertise and the within a secular legal structure, with no that it will maintain an Islamic portfolio. burgeoning wealth of Asia to develop reference to Arabic names. Other prominent Islamic banking service a strong Islamic asset management providers include Maybank and CIMB. repertoire. The country is home to one Nonetheless, like many other jurisdictions Nonetheless, several notable Shariah deals of the world’s largest Islamic real estate att empting to kick-start their Islamic took place in 2016 including a SG$260 investment trusts, Sabana REIT, which fi nance industry, Singapore did make million (US$179.58 million) transaction by continues to be active in the market: initial concessions to give the sector an RB Capital, one of the largest Islamic deals in December 2016 alone, Sabana REIT advantage in its vastly conventional in the city state and a SG$181 million confi rmed plans to acquire three diff erent landscape. Several regulations were (US$125.02 million) Islamic refi nancing properties and also met with China’s introduced between 2005 and 2009 facility by Sabana REIT. Sichuan Development Holding to explore legislating Shariah banking and fi nancing Islamic fi nance opportunities. As at the instruments as well as amendments to tax Sukuk end September 2016, the REIT’s total regulations which removed additional August 2016 saw the fi rst-ever default assets reached SG$1.06 billion (US$732.15 tax obligations arising from the asset- in a local currency Sukuk facility: a million); gross revenue dropped 9.7% based nature of Shariah transactions. subsidiary of Swiber Holdings was year-on-year to SG$23.03 million In 2013 however, the central bank — unable to meet its US$4.88 million (US$15.91 million). the Monetary Authority of Singapore obligation under its US$150 million (MAS) — allowed two Islamic fi nance tax 2013 Sukuk program. This was followed Fintech incentives (rolled out in 2008) to expire; by several bond defaults by other oil There is also a rise of Islamic this led to doubts on MAS’s commitment and gas players in the industry. The crowdfunding platforms in Singapore. to Islamic fi nance and banking. Yet defaults have raised concerns on the The city state is home to at least two such despite so, the regulator has consistently fi nancial sector’s exposure to the oil and platforms: Club Ethis and Kapital Boost. reaffi rmed its Islamic fi nance dedication. gas sector, with the expectation that In the fi nal quarter of 2016, Kapital Boost th On the 8 April 2015, a conditional tough market conditions are expected to was certifi ed Shariah compliant by the provision for the remission of stamp duty continue in 2017. Financial Advisory & Consultancy. to Islamic fi nancial contracts was made via the Stamp Duties (Islamic Finance The situation took place amid the biggest Outlook Arrangements) (Remission) Rules 2015. quarter-on-quarter GDP drop Singapore The slow momentum gained during 2016 has experienced since 2012, as the is expected to persist well into 2017: In June 2015, the deputy managing economy contracted by 4.1% during the analysts have downgraded their GDP director of MAS, Jacqueline Loh, July-September 2016 period; year-on- forecasts for Singapore (OCBC revised confi rmed that the apex bank was year, this represented a 0.6% expansion, growth to 1.5% from 1.9% and BMI working in collaboration with industry signifi cantly lower than previous Research from 2.2% to 1.9%) — and this participants and other government estimates of 1.7% growth. is likely to impact the Islamic fi nance institutions to provide greater clarity market as well. And while Singapore in the regulatory and tax treatment In general, Singapore has a relatively may have the makings to be a potentially for Sukuk including a potential pre- lackluster Sukuk market: government signifi cant Islamic wealth management approved standardized template for agencies have been active bond issuers center, the market lacks a substantial common Sukuk structures. in order to develop the nation’s capital retail base and government support to markets; however, in the past fi ve propel the sector. Government support Banking and ϐinance years (since 2015), there have only been and continued public awareness are key As far as the Islamic banking sector is 31 Sukuk issuances in the country, in developing its Shariah fi nance concerned, the market suff ered a blow according to MAS. The lack of Sukuk industry.

Ratings in Islamic ϐinance — criteria upgrades and rating changes

Rating actions are one of the many indicators conveying risks, opportunities and challenges that can aff ect the performance of debt issuances, fi nancial institutions, corporations, countries and other stakeholders in the Islamic fi nance industry. It has become an increasingly important determinant factor within the industry. DANIAL IDRAKI reviews rating activities across diff erent regions in the industry in 2016.

Methodological developments methodology to update Appendix 4, (CRCs) known as the Credit Rating In September 2016, Malaysian rating where the changes provide more clarity Companies Regulations 2016, stipulating agency RAM Ratings updated the on how the rating agency distinguishes various new requirements and criteria and methodology for Takaful between the diff erent legal aspects strengthening existing ones for CRCs. and insurance companies, incorporating of resolution regimes and will not in The new regulatory regime is in line updates arising from industry, regulatory themselves impact the credit ratings of with the SECP’s eff orts to strengthen and accounting developments in recent any banks, according to a statement. the capital market with a signifi cant years. The rating methodology also The appendix details how certain legal aspect being the introduction of a applies to captive insurers, reinsurers aspects of bank resolution frameworks detailed licensing regime for CRCs with and bankruptcy law are considered in the and fi nancial guarantee insurers. RAM fi t and proper criteria for promoters, application of Moody’s Advanced Loss has also renamed the terminology chief executives, directors and senior Given Failure approach, and related key used to assign ratings to insurance management offi cers. rating assumptions. companies, from a claims-paying ability rating (applicable to most entities in Global review Fitch Ratings, meanwhile, updated the insurance industry) and a fi nancial Sovereign ratings across the globe refl ect its criteria for rating Sukuk in August enhancement rating (applicable to last year, replacing the existing criteria uncertain global economic conditions. fi nancial guarantee insurers) to an published on the 18th August 2015. RAM downgraded Saudi Arabia to insurer fi nancial strength (IFS) rating. The new criteria apply to originator- ‘gAA3(pi)/Stable’ from ‘gAA2(pi)/ The IFS rating recognizes that insurers backed (asset-based) Sukuk structures, Negative’ on the back of the Kingdom’s may have fi nancial and/or debt internationally encompassing corporates, steep fi scal and current account obligations, on top of their obligations fi nancial institutions, sovereigns, deterioration, while it revised the to policy/certifi cate holders and as supranationals, public fi nance, insurers outlook on Bahrain’s sovereign ratings such, indicates an insurer’s overall and global infrastructure, but not to to negative from stable on the global, capacity to meet its fi nancial obligations asset-backed Sukuk which rely on ASEAN and Malaysia national scales. to policyholders and other creditors, underlying collateral. including debt holders. Moody’s revised the Omani banking Fitch’s analytical assumption under system to stable from negative, while Another Malaysia-based rating agency, these criteria is that the structure of the affi rming Jordan’s ‘B1’ government MARC, updated its rating approach Sukuk and the underlying transaction(s) issuer rating and ‘B1’ senior unsecured to Sukuk in August last year, which provide for full recourse to the originator debt rating, with a stable outlook. The was previously updated in April 2015. — as with a conventional bond issue — ratings refl ect Moody’s view that the The updated approach includes slight and the Sukuk rating is driven solely Hashemite Kingdom will manage to changes to Sukuk rating defi nitions to by the originator’s rating. The rating stabilize its main debt and external accommodate both asset-based and asset- agency added that there remains a lack vulnerability indicator metrics even backed instruments. MARC currently of legal precedents in terms of eff ective as overall debt remains high when uses two rating scales for rating Islamic enforcement in many jurisdictions compared to similarly rated peers. fi xed income instruments, an Islamic debt where Sukuk issuance is prevalent, and rating scale (with the subscript ID) and therefore it remains uncertain whether Fitch, meanwhile, affi rmed Kuwait’s a Sukuk rating scale (with the subscript certifi cate holders will be able to enforce long-term foreign and local currency IS). It will migrate existing Islamic their contractual rights in local courts. issuer default ratings (IDRs) at ‘AA’ debt ratings to the Sukuk rating scale Fitch further noted that the Sukuk with a stable outlook. The rating agency and subsequently withdraw its Islamic analysis and ratings will refl ect its view also affi rmed Qatar’s long-term foreign debt ratings and rating scale, which that the default of these senior unsecured and local currency IDRs at ‘AA’ with a will aff ect 14 debt ratings accorded to obligations under the legal structure and stable outlook. Over in Malaysia, S&P outstanding combined conventional and Sukuk documentation would refl ect the affi rmed the country’s long-term and ‘A- Islamic medium-term note programs, default of the entity in accordance with 2’ short-term foreign currency sovereign Bai Bithaman Ajil debt securities and Fitch’s rating defi nitions. credit ratings and also its ‘A’ long-term residential mortgage-backed securities of and ‘A-1’ short-term local currency 12 issuers. Over in Pakistan, the Securities and sovereign credit ratings with the outlook Exchange Commission of Pakistan on the long-term rating remaining In January last year, Moody’s Investors (SECP) had in August approved new stable. Service republished its bank rating regulations for credit rating agencies

Etihad Airways’s maiden Sukuk — The largest aviation and corporate issuance in MENA

Etihad Airways recently made its debut by the afternoon of the 21st November in the Islamic debt capital market at MS+215bps area, as books were with a landmark US$1.5 billion Sukuk already in excess of US$1.3 billion,” Etihad Airways Wakalah off ering. Ricky Thirion, the said Thirion, adding that: “Books closed group treasurer at the Abu Dhabi’s globally on the 23rd November and the US$1.5 billion fl agship carrier, explained to NURUL fi nal spread was set at MS+210bps, with ABD HALIM the reasons behind the Sukuk launched thereafter at a fi nal the success of this groundbreaking size of US$1.5 billion.” transaction. Besides Etihad’s solid credit Initially targeting to raise US$500 fundamentals, the region’s scarcity million, Etihad decided to upsize the of corporate Sukuk issuances also off ering following a strong demand for contributed to the success of this 23rd November 2016 its greenback Sukuk facility during a off ering, as investors, particularly series of fi xed income investor meetings Islamic banks, are constantly on the held in the UAE. By adopting an lookout for high-quality corporate Issuer Unity 1 Sukuk innovative approach to marketing the papers to bett er manage their balance Obligor Etihad Airways unlisted and privately-placed Sukuk, sheets. Size of Issue US$1.5 billion Etihad was able to yield very positive engagement from investors, resulting Thirion further highlighted that: Mode of Issue Private placement Regulation S senior in an initial price thought (IPT) of “Etihad’s Sukuk came with a premium unsecured Sukuk, midswaps (MS) + low-to-mid 200bps versus other Abu Dhabi government- registered unlisted with a fi ve-year tenor. related entities (GREs) as a premium Purpose General corporate for the unlisted/privately-placed format purposes was applied to outstanding secondary Tenor Five years Etihad’s comparable levels.” Issuance price 100% Sukuk Due to its private placement nature, Profi t rate 3.86% Etihad needed to ensure that investors Payment Semi-annually in arrear came with a are well-informed of the non-disclosure Currency US dollars lett er of undertaking process as Maturity date 30th November 2021 premium versus access to the documentation was Arranger(s) National Bank of Abu new to most regional investors and Dhabi (NBAD), HSBC, other Abu Dhabi required additional approvals for the JPMorgan unlisted format. Despite that, investors Bookrunner(s) NBAD, HSBC, JPMorgan, government-related were comfortable with the format Abu Dhabi Islamic Bank, and interactions, as distribution of Dubai Islamic Bank, First entities (GREs) Gulf Bank information was effi ciently managed as a premium with many regional and international Governing Law English Law accounts participating in the Sukuk, Legal Advisor(s) To the issuer: Cliff ord asserted Thirion. / Counsel Chance for the unlisted/ To the bookrunners: Allen & Overy Employing a Wakalah structure, the privately-placed Listing Unlisted transaction is backed by the rights to travel (measured in ATKM) as well as Underlying Rights to travel format was applied Assets (measured in Available rights to services associated with such Tonne Kilometres to outstanding travel provided by the airline. Among (ATKM)) the many highlights of Etihad’s fi rst Rating ‘A’ by Fitch secondary Sukuk issue include being the highest- Shariah Shariah boards of NBAD, rated paper from an airline issuer ever; Advisor(s) HSBC and JPMorgan comparable the largest capital markets issuance from Structure Wakalah the aviation industry in the MENA levels region; the largest ever Register S only Tradability Yes corporate Sukuk issuance; and the fi rst Investor Not disclosed syndicated US dollar Sukuk issuance breakdown “Investors’ confi dence in Etihad was from an Abu Dhabi’s GRE since 2009. Face value US$200,000 and integral instantly refl ected in the orderbook, / minimum multiples of US$1,000 in investment excess thereof enabling the issuer to release guidance

The outlook and predictions for Islamic ϐintech in 2017 and beyond

By Mohammad Raafi Hossain, a social There are already certain projects entrepreneurship and ethical expert. underway involving multiple With the governments for support toward the In the tech world — with fi ntech being nascent Islamic fi ntech sector. Public rise of new no exception — there is a widely sector support will also give asset accepted adage: Change in consumer managers, venture capitalists and other technologies such behavior doesn’t happen as fast as key institutional investment partners to expected, but when it does, the results take the deep dive into the Islamic fi ntech as blockchain and are far greater than anticipated. space. a host of digital That being said, Islamic fi ntech is The rise of the ‘tech’ in just catching on, but I would like payment solutions, to say certain concrete milestones Islamic ϐintech were crossed in 2016 with the most With the lack of signifi cant institutional there is a new prominent among them being the notion support in 2016, most Islamic fi ntech that Islamic fi ntech, being an actual, start-ups had to be creative in fi nding wave of platforms tangible industry, is real and here to a way to prove their business models. stay. In 2015, Islamic fi ntech was not Often times, this comes at the cost that are emerging two words that were linked together in of integrating the most cutt ing-edge any meaningful way. Today, as one of technologies. around areas that its founding members, there is an Islamic Fintech However, many of the leading are beyond the Alliance with over a start-ups in 2016 will have P2P crowdfunding dozen members much more freedom and continuing to and larger budgets to space, including grow. incorporate more rigorous tech to scale wealthtech, I expect 2017 to their platforms in be a transition 2017 and beyond. insuretech and year for Islamic fi ntech with Pilot other solutions that the industry collaborations going from from Islamic will affect a validation phase to a banks every side of growth phase. In the conventional Based on this fi ntech space, 2016 banking outlook, I believe was a year that four things will marked ‘disruptors Diversiϐication from just happen to continue (start-ups)’ and crowdfunding to facilitate that ‘incumbents (banks)’ With the rise of new technologies such as transition: fi guring out that sometimes joining blockchain and a host of digital payment solutions, there is a new wave of Institutional together is the best way forward. As such, some platforms that are emerging around areas support for of the largest banks in the that are beyond the P2P crowdfunding Islamic ϐintech world made a concerted space, including wealthtech, insuretech and other solutions that will aff ect every With Islamic fi ntech now eff ort to join forces with side of banking. more than just a concept, determined start-ups. there will be greater There are already Islamic fi ntech institutional support for current Given the success of this shift in start-ups venturing in this direction and and future platforms to enter strategy, the same is expected to it’s a welcome development, given that this burgeoning ecosystem. Such occur at an even more rapid pace the founding members of the Islamic support will come, initially, from in the Islamic fi nance sector in 2017 Fintech Alliance were all crowdfunding governments looking to solidify and beyond. platforms. themselves as the future home of Islamic fi nance.

Russia: 2016 — there is hope for IFN Country Correspondents AFGHANISTAN:, Manezha Sukhanyar, breakthroughs head of Islamic banking, Maiwand Bank AUSTRALIA: Christopher Aylward, partner, Finance and Major Transactions, Madison Marcus Law Firm RUSSIA RAEIF Coordinator Madina Kalimullina BAHRAIN: Dr Hatim El Tahir, said that the process of Islamic fi nance director of Islamic Finance Knowledge Center, Deloitt e By Dr Ilyas Zaripov & Touche development is still not up to par yet BANGLADESH: Md Siddiqur Rahman, and experts should work together to executive vice president, Islami Bank Bangladesh Despite a legal support vacuum for push Islamic fi nance in Russia in 2017. BOSNIA HERZEGOVINA: Amer Bukvic, CEO, Bosna Islamic fi nance in 2016, active eff orts Bank International for the establishment of Islamic fi nance BRAZIL: Fabio Figueira, In this regard, support from the partner, Veirano Advogados infrastructure has begun. In December, regulator, Bank of Russia, is important. CANADA: Jeff rey S Graham, progress is being made in Halal- partner, Borden Ladner Gervais On the 21st December, the fi fth oriented business which bodes well for EGYPT: Dr Walid Hegazy, meeting of the Working Group on managing partner, Hegazy & Associates the rapid and steady development of Partnership Banking (WGPB) under the FRANCE: Jean-Baptiste Santelli, Islamic fi nance in Russia. lawyer, De Gaulle Fleurance & Associates chairmanship of Alexey Simanovsky, HONG KONG: Wilson Yeung, the advisor to the chairman of the Bank member, The Taxation Institute of Hong Kong Anatoliy Aksakov, the chairman of the INDIA: H Jayesh, of Russia, took place. Top managers State Duma (Parliament) of the Russian founder & partner, Juris Corp from the National Bank of the Republic INDONESIA: Farouk Alwyni, Federation Financial Market Committ ee, of Tatarstan and Bashkortostan CEO, Alwyni International Capital initiated the preparation of a legal base IRAN: Majid Pireh, had reported about Islamic fi nance for Islamic fi nance development in Islamic fi nance expert, Securities & Exchange development in their regions. Organization of Iran Russia. Vladimir Gusakov, the head ITALY: Stefano Padovani, Representatives of private institutions of the Expert Group, organized two partner & head of banking and fi nance, NCTM Studio including Ilyas Zaripov (banking group Legale Associato Islamic fi nance brainstorming sessions Zenit), Vladimir Gusakov (the Moscow KAZAKHSTAN: Timur Rustemov, involving experts, during which chairman, Association for development of Islamic fi nance exchange) and experts including M two drafts of federal laws related to KENYA: Mona K Doshi, Kalimullina and M Yandiyev also senior partner, Anjarwalla & Khanna Advocates non-interest fi nancial activity were participated in the discussions. KOREA: Yong Jae Chang, discussed. partner, Lee & Co KUWAIT: Thuwaini Al-Thuwaini, executive manager of An Islamic fi nance educational investments, Warba Bank MALAYSIA: Ruslena Ramli, program started in November 2016 head, Islamic fi nance, RAM Rating Conventional and representatives of the Ministry MALDIVES: Aishath Muneeza, of Education of Russia were asked to deputy minister, Ministry of Islamic Aff airs, Maldives MALTA: Reuben Butt igieg, banking is include Islamic fi nance in educational president, Malta Institute of Management programs for economists and legal MOROCCO: Ahmed Tahiri Jouti, advisors in all universities in the COO, Al Maali Consulting Group to be transformed NEW ZEALAND: Mohamed Nalar, Russian Federation. trustee and board member, Awqaf New Zealand and ethical ϔinance NIGERIA: Auwalu Ado, head of Shariah audit, Jaiz Bank In his closing speech, Simanovsky OFFSHORE CENTERS: Manuela Belmontes, is the real and admitt ed the fact that conventional partner, Maples and Calder (Dubai) banking is to be transformed and ethical OMAN: Anthony Coleby, transparent way head of corporate commercial, Said Al Shahry Law Offi ce fi nance is the real and transparent way PAKISTAN: Muhammad Shoaib Ibrahim, for banks to keep customers. managing director & CEO, First Habib Modaraba for banks to keep QATAR: Amjad Hussain, partner, K&L Gates Simanovsky also thanked members of RUSSIA: Dr Ilyas Zaripov customers the working group for activity in 2016 member, Partnership banking working group, Central Bank of the Russian Federation and asked the staff of the Bank of Russia SAUDI ARABIA: Nabil Issa, to summarize all proposals to prepare partner, King & Spalding real steps for the promotion of Islamic SINGAPORE: Lim Say Cheong, Another key Islamic fi nance event head of Islamic banking, Maybank Singapore fi nance in 2017 within the Partnership was the annual meeting of the Russian SRI LANKA: Imruz Kamil, head of Islamic banking, Banking Development Roadmap in Richard Pieris Arpico Finance Association of Islamic Financing Experts 2017. The next meeting of the WGPB TANZANIA: Yassir Salim Awadhi Masoud, (RAEIF) hosted on the 16th December by head Islamic Banking and Retail Banking, National Bank will be in the fi rst quarter of 2017. of Commerce Plekhanov Russian Economic University TUNISIA: Mohamed Araar, (PREU) which provided a platform general directorate of External Financing and Sett lements, Dr Ilyas Zaripov is a member of the for an online conference for experts. deputy director of Private Financing and International partnership banking working group at the Relations Department , Central Bank of Tunisia RAEIF members from Moscow, Kazan, Central Bank of the Russian Federation. He TURKEY: Ali Ceylan, Makhachkala and even the Netherlands partner, Baspinar & Partners can be contacted at [email protected]. UAE: Anita Yadav, discussed the current trends of Islamic senior director, head of fi xed income research, Emirates fi nance development, stressing the NBD IFN Correspondents are experts in their respective fi elds and major problems and also accepting new are selected by Islamic Finance news to contribute designated short country reports. For more information about becoming members. an IFN Correspondent please contact sasikala.thiagaraja@ redmoneygroup.com

A 2016 update on the Indonesian government’s Sukuk

INDONESIA totaling US$2.5 billion, with one issuance banking assets, it is most likely that amounting to US$1.75 billion with a government Sukuk will continue leading By Farouk Abdullah Alwyni 10-year tenor and 4.55% coupon and the the growth of Islamic banking sector. other a US$750 million fi ve-year facility It is important to note that the share of Since the enactment of the Law No. carrying a 3.4% coupon. government Islamic securities has been 19/2008 relating to government Sukuk, steadily increasing over the time. the government of Indonesia through the Ministry of Finance (MoF) has been By now, Indonesia is the largest active in issuing Sukuk. Currently, sovereign Sukuk issuer globally in terms As of November 2016 (Table 1), the there are seven types of the government total issuance and total outstanding. share of government Islamic securities Sukuk with tenors ranging from six Other major sovereign issuers include accounted for 18.7% of the total months to over 10 years. There are Dubai, Malaysia, Turkey, and Qatar. outstanding of government securities, tradable and non-tradable Sukuk Considering the sizable amount of a signifi cant rise compared to around through private placement. There are infrastructure fi nancing required by 11.5% and 11.6% in its previous three also retail Sukuk and global Sukuk, the government, it is most likely that years (2012, 2013, and 2014). The MoF both issued since 2009, and have been Indonesia will continue to be major has also targeted that in 2016 the gross regularly issued since then. sovereign Sukuk player in the near issuance of Islamic securities will account future. for 27.5% of total gross issuance of According to data from the MoF, the government securities. total government Sukuk issued till the Domestically, the government has also 16th November 2016 stood at IDR565.74 been the biggest player in the Islamic It is also possible for the government to trillion (US$42.5 billion), with US dollar- fi nance sector. The issuance of Shariah use Sukuk to fi nance many possible denominated global Sukuk accounting securities has surpassed total Islamic public-private partnership to fund the for 21.3%. In 2016, the government banking assets since 2015. With the infrastructure needs of the country. It issued dual tranche global Sukuk slowdown in the growth of Islamic will then drive more innovation in the area of both infrastructure fi nancing and Table 1: Outstanding government securities (IDR trillions) the Islamic capital market. 2008 2011 2012 2013 2014 2015 November 2016 Farouk Abdullah Alwyni is CEO of Alwyni Debt securities 521 684.6 757.2 908.1 1,101.6 1,327.4 1,528.2 International Capital (AIC) and the Islamic securities 4.7 62.8 98.8 118.7 143.9 201 286 Chairman of the Center for Islamic Studies (0.9%) (8.4%) (11.5%) (11.6%) (11.6%) (15.1%) (18.7%) in Finance, Economics, and Development Total outstanding 525.7 747.4 856 1,026.8 1,245.5 1,528.4 1,814.2 (CISFED). He can be reached at faalwyni@ securities alwynicapital.co.id. Source: Bank Indonesia

The start of the much-awaited end of the year

QATAR end of 2017 has raised the issue of cost- cutt ing by state-owned entities. By Amjad Hussain On the other hand, the recent A rather long and turbulent year announcement of the acquisition of the is slowly drawing to an end, with State of Qatar and Glencore of a 19.5% perhaps more uncertainty about what shareholding in Rosneft (the second- lies ahead in 2017. Whilst a deal was largest Russian oil company) for US$11 struck between the OPEC producing billion is a sign of the solid state of the It's fair to say that 2016 has been a nations recently (which may be for Qatar market and its sovereign wealth challenging year for Qatari fi nancial the benefi t of international securities fund. markets, including Qatar) it is unclear institutions and most will be keen to see it come to a close. The hope is that next what the impact of this deal will be on The banking sector has been relatively year will see bett er fortunes for the oil prices and how the markets will quiet last month, predominantly hydrocarbons and therefore economies behave in the coming year. because of the upcoming end of the which depend upon hydrocarbons for year and most institutions within Qatar their main source of revenue. Time will Two major deals were concluded have eff ectively closed shop and are recently that leave more answers than fi nalizing their records and planning tell. questions. Firstly, the decision of Qatar and budgeting for the next fi nancial Petroleum (the national oil company) year. However, a number of banks have Amjad Hussain is a partner at K&L Gates. to merge its two gas subsidiaries (Qatar been recognized for their achievements He can be contacted at Amjad.Hussain@ Gas and Ras Gas) into one entity by the and growth. klgates.com.

Collaboration to bring more women into Islamic ϐinance

MALDIVES Table 1 By Dr Aishath Muneeza Name of the institution Number of Females Maldives Islamic Bank 0 The Women On Boards (WOB) NGO Amana Takaful Maldives 0 has signed an MoU with the Maldives Center for Islamic Finance (MCIF) on HDFC Amna 2 the 19th December 2016. This MoU is Allied Avady 1 part of the eff orts by WOB to bring Maldives Hajj Corporation 1 women into Islamic fi nance. The areas Housing Development Corporation 2 of collaboration include maintaining a Maldives Transport and contracting company 2 register of women in Islamic fi nance, collaborating with the MCIF on training Alia Investments 1 and awareness of Islamic fi nance for Bank of Maldives 0 women, research and development Maldives Monetary Authority (Central Bank) 0 and working together overall to bring Capital Market Development Authority 3 women into Islamic fi nance. This is Source: Author's own indeed a remarkable eff ort to increase female participation in the Islamic years since its inception and the number It is hoped that the collaboration between fi nance industry. of female Shariah scholars in Islamic the two entities will increase the number fi nancial institutions in the Maldives is of female players in the industry. The Maldives is the only jurisdiction high compared to other jurisdictions in in the world where an apex Shariah Dr Aishath Muneeza is the chairman of the the world. The supporting statistics are council of a regulatory authority has Maldives Center for Islamic fi nance. She can provided in Table 1. been chaired by a female scholar for fi ve be contacted at [email protected]. '

Turkey: Financial inclusion and economic developments

TURKEY continue to be taken to support fi nancial Following calls from the president and stability. other Turkish offi cials for the Turkish By Ali Ceylan people and institutions to convert their The Turkish lira’s value has been US dollar deposits into the Turkish lira, The Turkish government declared decreasing against the US dollar as well the parity rate fell below 3.35 in a week a state of emergency right after the as against the euro following the US after reaching a historic high of 3.59.The 15th July coup att empt and extended presidential election. President Recep rate, which started trading at 3.38 early in it after the initial three months. The Tayyip Erdogan called for citizens to the day, fell as low as the 3.3410 level on existing state of emergency will expire th keep their savings and make transactions the 8 December. in late January 2017 for the purpose of in liras rather than foreign currencies. eradicating the threat. The president’s call for Turkish citizens Saudi Arabian Trade and Investment to convert their foreign exchange into Minister Majed Abdullah Al-Qasabi said Several credit agencies like Moody’s liras became a big campaign across they will mobilize opportunities in Saudi raised the credit note of Turkey in the the country. A number of institutions Arabia to improve their investment previous months due to the economic announced measures to prop up the relations with Turkey, and ease the visa reforms in the country. Despite these Turkish lira to support the struggling process for Turkish business people to developments, Fitch Ratings has currency following the president’s call. enable them to get two-year, multiple announced that it has revised the Turkish entry visas. He said that they want to be banking sector outlook for 2017 from The Energy Markets Regulation part of the solution and improve mutual stable to negative. The evaluation is Authority stated that it would hold gas investment relations between Turkey and based on political uncertainty, bank distribution tenders in liras rather than in Saudi Arabia.Saudi energy giant Aramco asset quality and Turkey’s longer-term US dollars. Turkish Airlines also stated signed deals with 18 Turkish companies economic performance. that Umrah pilgrimage visits originating to enable them to bid in energy projects. Saudi Aramco CEO Amin Nasser said from Turkey will be paid for via liras. The Turkish government and the central that Saudi Arabia aims to increase its Moreover, the Foreign Economic bank have been taking the required locality rate in energy-related products Relations Board and the Turkish measures to ensure the eff ects from and services by 2021. Privatization Authority also announced the latest temporary fl uctuation in the that they will support these transactions. economy are not damaging. In relation Ali Ceylan is a partner at Baspinar & Turkey’s main stock exchange, Borsa to the economic events in Turkey, the Partners. He can be contacted at ali.ceylan@ Istanbul, became the fi rst institution to country’s Economic Coordination Board baspinar.av.tr. convert all its cash assets into liras. stated that necessary measures will

Kuwait stays the course after OPEC oil cut deal

KUWAIT The move was emblematic of a shift in initiatives, including the gradual lifting strategy that Kuwait and other GCC have of longstanding subsidies and raising By Thuwaini Al Thuwaini espoused in recent years to depress oil international funding for the fi rst time in prices and enervate US shale producers history, in the wake of recording its fi rst Over the last decade or so, a growing who swelled global oil production budget defi cit in 2016 due to subdued oil number of pundits have increasingly from the end of 2009 through 2014 prices following nearly two decades of believed that OPEC’s ability to control despite weak international demand surpluses. One day prior to the the market price of crude oil has predominately due to high oil prices. announcement of the OPEC production considerably diminished. Perhaps, there Whether the crude oil price gains will cut agreement, the State of Kuwait sent may be some credence to the notion of sustain itself over the next six months out a request for proposals (RFP) for its a weakening OPEC; however, judging will depend on how rigorously OPEC very fi rst sovereign bond issue it plans to by the agreement which occurred on the producers adhere to the new agreement. debut on or about the fi rst or second 30th November 2016 by OPEC producers calendar quarter of 2017. In similar and, much to everyone’s amazement, As part of the deal, Kuwait agreed fashion, it is widely anticipated that non-member producers like Russia, to cut production by 131,000 barrels Kuwait will also tap the Islamic debt to cut oil production levels starting per day from its reference production capital market through the issuance of January 2017, OPEC believes it can still level of 2.84 million barrels per day, Sukuk; however, no RFP for the same has wield infl uence over the market price of the deal document showed. Moreover, been sent out to prospective arrangers to crude oil. Kuwait will be taking a proactive role in date. surveilling OPEC oil production cuts. In line with OPEC’s expectations, Thuwaini Al Thuwaini is the acting chief benchmark crude oil prices climbed up The 30th November agreement, however, investment banking offi cer of Warba approximately 10% soon after the deal isn’t expected to change the course of Bank. He can be contacted at Thuwaini. was announced along with the prices Kuwait’s fi scal agenda which calls for the [email protected]. of public energy companies globally. implementation of economic reform

Developing Islamic ϐinance in Hong Kong at a greater pace enhances its role in AIIB

HONG KONG days would undermine the economic availability of diff erent fund-raising purpose of the Sukuk transaction giving channels, etc. By Wilson Yeung rise to the eff ective tax cost of the Sukuk transaction being largely higher than As a mature fi nancial center, Hong Kong Although Beijing has been recently that of a conventional bond fi nancing is well-positioned to develop as a Sukuk chosen as the headquarters of the Asian transaction. market. The Hong Kong government has Infrastructure Investment Bank (AIIB), proved its commitment to provide the tax it is strongly believed by the market To allow Sukuk to receive the same tax and regulatory framework to promote that Hong Kong would be able to speed treatment, the Hong Kong government the industry. Hong Kong is already well- up its Islamic fi nance development in did a great job in 2013 by introducing placed to serve as a gateway for investors 2017 given its well-facilitated fi nancial legislative amendments to the Inland who are interested in Asia, particularly platform and readily available legal Revenue Ordinance and Stamp Duty mainland China, by structuring Shariah and tax framework. Therefore Hong Ordinance, thereby ensuring that compliant fi nancial instruments with Kong will play a signifi cant and unique Sukuk can enjoy the same treatment underlying Asian assets. role in One Belt One Road initiatives, as traditional debt securities, which particularly as more sovereign and essentially involved an exemption During the past decade, emphasis on unprecedented corporate Sukuk from profi t tax and property tax and a developing Islamic fi nance has been issuances are long in the making to remission of stamp duty, achieving a included in the Hong Kong government's strengthen its ties with infrastructure level playing fi eld for the development of budget policy several times, especially in project fi nancings. Sukuk in Hong Kong. the recent three years. It is expected that a more concrete idea and implementation The key uncertainties arising from Sukuk The legal, taxation and regulatory plan will be presented to the public in the transactions are that the arrangement frameworks in Hong Kong are readily upcoming 2017/18 budget in February itself operates in the form of equity available for supporting Sukuk issuance. next year. fi nance but is in substance similar to debt fi nance. If the tax consequences The development pace of the Hong Kong Wilson Yeung is a certifi ed tax adviser and of the constituent transactions are Sukuk market will be market-driven, a member of The Taxation Institute of Hong determined based on their legal form subject to a number of factors including Kong. He can be contacted at wyeu002@ rather than their economic substance, the development of global Sukuk market, gmail.com. simply applying the tax laws in the old investor demand, funding cost, the

Busy last quarter for private equity and venture capital

PRIVATE EQUITY & purchase of a property portfolio in the VENTURE CAPITAL Boston and Denver metropolitan areas for a reported US$250 million. By Osama Audi Investors and asset managers in the The last few months have seen a fl urry UAE and Saudi Arabia continued their of private equity and venture capital rapid push into the venture capital deals in the Middle East. space with headline-grabbing deals. Leading Bahrain-based alternative asset Dubai-based Mohammad Alabbar manager, Arcapita, announced that announced a series of venture capital it has raised approximately US$100 and e-commerce ventures including the million to fund additional acquisitions. launching of his e-commerce venture noon.com. Noon is building what is Riyadh-based Jadwa Healthcare billed as the world’s largest warehouse Opportunities Fund 2 acquired a stake adjacent to Al Maktoum Airport in Jebal in United Eastern Medical Services, a Ali, Dubai to serve as a platform for its UAE-based healthcare provider. regional growth. In addition, Alabbar announced a US$1 billion joint venture In addition, Abu Dhabi-based private with the Saudi Public Investment Fund equity fi rm, Gulf Capital announced the to push further growth in the newly- closing of the acquisition of Sporter.com, launched platform. an online retailer of sport and health supplements as well as the possibility Finally, e-commerce heavyweight, In Saudi Arabia, Bab Rizq Jameel, that it may pursue the sale of some of Amazon.com, is reportedly weighing a signed an agreement with Careem, the its assets towards the end of 2017 in bid to acquire a stake in Dubai-based MENA-based ride hailing service, to anticipation of a rebound in regional e-commerce platform, Souq.com. provide training opportunities in Saudi economies. Arabia. Careem was also reported to be Osama Audi is a member of King & closing in on US$300 million in funding Finally, continuing the search for Spalding’s Middle East & Islamic Finance from regional and international venture diversifi cation, Bahrain-based Investcorp and Investments practice group. He can be capital investors. announced that it had completed the contacted at [email protected].

The problems of Takaful Umum and the potential effects on Shariah insurance in Indonesia

TAKAFUL & RE-TAKAFUL Malaysia and Takaful Keluarga) are Takaful operators themselves. By Marcel Omar Papp This raises the question if TU's problems Takaful Umum (TU) from Indonesia, are caused by being a fully-fl edged on the 10th November 2016, has stopped operator rather than a window as most writing new risks and is looking for an investor to take over their risk fund, as other Shariah insurers in Indonesia. apparently the Wakalah fee generated However, their own sister company, is not suffi cient to cover their operating Takaful Keluarga, is doing fi ne despite of costs. being a fully-fl edged operator. Instead, the problems of TU are more company- TU was one of the pioneers of the specifi c. They highlight the importance Indonesian Shariah insurance industry of having strong distribution capabilities having been established in 1994. Until through close banking partners and/or now they are one of the biggest General a good agency network in a widespread could be a negative eff ect on the entire Takaful players with a contribution country such as Indonesia. Shariah insurance industry in Indonesia income of IDR118 billion (US$8.87 as customers may raise some question million) (in 2014) and one of the few It is now important that the existing marks concerning the soundness and fully-fl edged Takaful companies in policyholders of TU do not experience future viability of the industry. Indonesia. Contrary to most other any negative eff ects from this recent Shariah insurers in the country, it is not decision. A solution will have to be Marcel Omar Papp is the head of re-Takaful owned by a conventional insurer as both found which is equitable, fair and at Swiss Re Retakaful. He can be contacted at their majority shareholders (Takaful acceptable to them. Otherwise, there [email protected].

Developments in December look IFN Sector Correspondents promising for the coming year CROWDFUNDING: Craig Moore CEO, Beehive FINANCIALINSTITUTIONS benchmark US$1.5 billion Sukuk DEBT CAPITAL MARKETS: Imran Mufti AND CORPORATE SUKUK issuance at 3.86%, while Abu Dhabi Partner, Hogan Lovells Islamic Bank fully repaid its US$500 By Rizwan H Kanji FAMILY OFFICES: Stephen Cutt s million Sukuk from its own resources. Head of family offi ce, ADIB private offi ce In Kuwait, Warba Bank plans a US$250 In Malaysia, which has accounted FINANCIAL INSTITUTION & CORPORATE SUKUK: million Tier 1 issuance, while Ahli United Rizwan H Kanji for approximately 45% of total global Bank listed its US$200 million Sukuk on Partner, King & Spalding Sukuk issuance by value in 2016, NASDAQ Dubai. Saudi Investment Bank LAW (EUROPE): Shakeel Adli Maxis and Gas Malaysia successfully Partner, head of Islamic fi nance, CMS also closed a SAR500 million (US$133.23 completed transactions, while Maybank million) private Tier 1 placement. LEGAL FRAMEWORKS: Dr Hurriyah El Islamy set up a Murabahah-based Sukuk Islamic fi nance expert, IMF program of up to RM10 billion (US$2.25 In terms of outlook, Al Baraka Banking billion). The International Islamic MERGERS & ACQUISITIONS: Burak Gencoglu Group has indicated plans to issue a Tier Senior att orney, GSG Att orneys at Law Liquidity Management Corporation 1 capital-boosting Sukuk facility in the also reissued its US$500 million MICROFINANCE: Mohammed R Kroessin fi rst quarter of 2017, while ACWA Power Head of Islamic microfi nance, Islamic Relief short-term Sukuk, while in Indonesia, plans to raise up to US$1 billion via BRI Syariah’s IDR1 trillion (US$74.4 PRIVATE EQUITY & VENTURE CAPITAL: Sukuk, with Moody’s Investors Service Osama Audi million) issuance received a positive Member, King & Spalding’s Middle East & Islamic assigning a provisional long-term ‘Baa3’ Finance and Investments practice group response from investors. rating. REAL ESTATE: Philip Churchill Founder partner, 90 North Real Estate Partners In the Middle East, the IDB sold its Rizwan H Kanji is a partner at King & benchmark US$1.25 billion fi ve-year RISK MANAGEMENT: Ken Baldwin Spalding. He can be contacted at rkanji@ Lecturer in fi nance, Coventry University Sukuk at a 2.26% profi t rate. In the UAE, kslaw.com. SHARIAH & CORPORATE GOVERNANCE: Etihad Airways priced its signifi cant Prof Dr Mohamad Akram Laldin Executive director, International Shariah Research Academy for Islamic Finance

SOVEREIGN SUKUK: Hamed Afzal Partner, King & Spalding

TAKAFUL & RE-TAKAFUL (ASIA): Marcel Omar Papp Head of Retakaful, Swiss Re Retakaful

TAKAFUL & RE-TAKAFUL (EUROPE): Ezzedine Ghlamallah Director, Solutions Insurance and Islamic Finance (SAAFI)

TREASURY PRODUCTS: Aadil Nastar Treasurer, Qinvest

IFN Correspondents are experts in their respective ﬁ elds and are selected by Islamic Finance news to contribute designated short sector reports. For more information about becoming an IFN Correspondent, please contact [email protected]

Sukuk showers in December brighten up outlook for 2017

SOVEREIGN SUKUK Similar announcements were made in million)-worth of Sukuk sold at a profi t North Africa: in Tunisia, the governor of rate of 4.79% and due to mature in 2035. By Hamed Afzal the central bank called for the country to issue a benchmark-sized Sukuk facility Autoriti Monetari Brunei Darussalam As the fi scal year drew to a close, to boost the economy, as reported by the also, on behalf of the government of December saw a number of key Middle East Monitor. Brunei, issued its 140th series of short- announcements which suggest a healthy pipeline for the sovereign Sukuk term Sukuk for a total amount of market at the start of 2017. Reuters The fi nance minister of Morocco also, BN$100 million (US$69.57 million), reported that Kuwait has sent a request according to Reuters, recently stated which priced at 0.56% and will mature for proposals for a potential debut US that the sovereign will issue its fi rst-ever in 2017. The government of Bangladesh dollar-denominated sovereign bond sovereign Sukuk in the domestic market also issued short-term Islamic issuance; it remains to be seen whether in the fi rst half of 2017. investment bonds to the tune of BDT1.67 a Sukuk issuance will follow as the billion (US$20.58 million). Kuwaiti fi nance minister had previously The past few weeks have also seen a disclosed the government’s intention number of completed transactions, Hamed Afzal is a senior associate at King th to use Islamic (as well as conventional) particularly in Asia. On the 8 & Spalding. He can be contacted at hafzal@ bonds to reduce the sovereign’s budget December, the Malaysian government kslaw.com. defi cit. issued RM1.5 billion (US$338.34

Islamic ϐinance and UN Sustainable Development Goals: A regulatory perspective

The philosophies of proﬁ t maximization and consumerism as a means for the pursuit of happiness have failed people. The typical model of economic development has resulted in the collapse of ﬁ nancial markets on more than one occasion, and created a number of externalities. JAMSHAID ANWAR CHATTHA writes.

Jamshaid Anwar Table 1: Sustainable development goals and Islamic fi nance Chatt ha is the chief UN Sustainable Development Goals fi nancial analyst and Islamic fi nance expert at * Goal 1. End poverty in all its forms everywhere the Central Bank of * Goal 2. End hunger, achieve food security …. Kuwait. He can be contacted at [email protected]. * Goal 3. Ensure healthy lives and promote well-being for all at all ages * Goal 4. Ensure inclusive and equitable quality education … Notably, the recent global fi nancial crisis has posed poignant challenges * Goal 5. Achieve gender equality and empower all women and girls about the stability and sustainability * Goal 6. Ensure availability and sustainable management of water and sanitation for all of the fi nancial system. Therefore, the recurring fi nancial debacles coerce a * Goal 7. Ensure access to aff ordable, reliable, sustainable and modern energy for all dire need for an economic model that addresses these global challenges. * Goal 8. Promote sustained, inclusive and sustainable economic growth, … In the process of exploring possible * Goal 9. Build resilient infrastructure…, answers to the challenges, what has remained less explored is the fact that * Goal 10. Reduce inequality within and among countries Islamic fi nance off ers basic principles * Goal 11. Make cities and human sett lements inclusive, safe, resilient and sustainable closely in line with the concept of sustainable development (SD) adopted * Goal 12. Ensure sustainable consumption and production patt erns by the UN. * Goal 13. Take urgent action to combat climate change and its impacts

To make a long story short, the UN * Goal 14. Conserve and sustainably use the oceans, seas and marine resources for sustainable Sustainable Development Goals (SDGs), development replacing the Millennium Development * Goal 15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably Goals, is a new set of guidelines for manage forests, combat desertifi cation, and halt and reverse land degradation and halt the world, which sets priorities and biodiversity loss aspirations for 2030 (Table 1) and envisages a revitalized global partnership * Goal 16. Promote peaceful and inclusive societies for SD, provide access to justice for all and build eff ective, accountable and inclusive institutions at all levels for SD. * Goal 17. Strengthen the means of implementation and revitalize the global partnership for SD That being said, debates about SD and SDGs have moved center stage in Source: htt ps://sustainabledevelopment.un.org/sdgs recent years from many perspectives. This article endeavors to address the Right from the advent of Islam, the medieval roots including an immense following questions: “How Islamic unfeigned signifi cance of the economy literature from Muslim scholars such fi nance can help in achieving the SDGs?” has been emphasized by Prophet as Al-Ghazali and Ibn-Khaldun. In his and “What are the key considerations for Muhammad (s.a.w.) whose fi rst work, Al-Ghazālī refers to the protection regulators for achieving the SDGs?”. profession was trade and commerce. of fi ve purposes or essential elements to In order to ensure a broad-based promote the well-being of all mankind: Islamic ϐinance perspective sustainable economic growth, Islam religion (Al-Deen), life (Al-Nafs), has put in place certain mechanisms progeny (Al-Nasl), intellect (Al-Aql) and on sustainable development – such as the mandatory payment of property (Al-Maal). Further, according natural alliance Zakat and the voluntary payment of to Ibn Khaldun’s multidisciplinary The principles of Islamic economy – with Sadaqat, the creation of Waqf and the theory, promulgated more than 600 features of social altruism – off er a just prohibition of Riba and Gharar. These years ago, immorality, and injustice are and fair socioeconomic system where measures in totality are suffi cient for indicators of unsustainable development there is a strong commitment toward the poverty alleviation and the creation of which caused the fall of the nations. well-being of human society. From its a sustainable society which ultimately The intellectual legacy of Ibn Khaldun fusion of economic and moral principles, ensures SD. is unique among Muslim thought, and Islam advocates a sustainable model of very relevant in the modern context. Ibn development. SD is not a new concept to Muslim Khaldun’s Muqaddimah was the fi rst economists. Islamic economics has work which promulgated the economic

Continued theories put forward by Adam Smith in To underscore the importance of the his Wealth of Nations publication. Figure 2: Key considerations for regulators contracts in the modern era, we saw a Nobel Prize for 2016 awarded jointly to There are over hundred verses in the Trust and Oliver Hart and Bengt Holmström “for Quran covering economic justice, credibility their contributions to contract theory”. equality and equal distribution of wealth. While the new theoretical tools created For instance, Quranic verse 7:31 refl ects by Hart and Holmström are valuable to the very basic concept of SD: “Eat and the understanding of real-life contracts Direct link drink, but waste not by excess, for Allah and institutions, as well as potential Cross-sectoral between the loves not the wasters.” cooperation real sector and pitfalls in contract design, their ęnancial sector signifi cance has been outlined 1,400 Actually, sustainability and Islamic years ago by Islam and Islamic fi nance fi nance represents a natural alliance. is built of these contracts. Given its emphasis on justice and risk- sharing, direct linkages between fi nance Financial Regulation and 2. Direct link between the real sector supervision and the real economy, partnership-based inclusion and the fi nancial sector. So how do and equity-focused approaches and the we ensure direct links? The empirical Source: Author avoidance of excessive speculation and evidence from the Islamic banking leverage, Islamic fi nance emphasizes the industry points to debt-fi nancing being full integration of fi nance with the real the most dominant form of fi nancing economy and helps the fi nancial services compared to risk-sharing modes sector to achieve greater stability and a and alleviating poverty in a dignifi ed of fi nancing (Musharakah and/or sustainable growth trajectory. manner and have led to wider social and Mudarabah). This makes the promotion fi nancial inclusion. These are in line with, of risk-sharing modes of fi nancing In my view, greater reliance on the and, are able, to support the SDGs. quite challenging. Risk-sharing modes principles underlying Islamic fi nance will of fi nancing are no doubt one of the improve fi nancial sector stability, which Roadmap to achieve the SDGs essential distinctive qualities of Islamic in turn, helps in promoting resilience, with Islamic ϐinance: Key fi nance. increasing social sustainability and facilitating sustainable infrastructure regulatory considerations In the case of equity-like fi nancing, the development. A similar view is refl ected There are fi ve ways through which following measures, if applied, have in the recent G20 and OECD report (July Islamic fi nance could support eff orts to the potential to ensure a direct link 2016), and this is already being translated achieve SDGs. between the real sector and the into a reality, for example in 2014, fi nancial sector. These measures the International Finance Facility for 1. Trust and credibility of Islamic include: (a) enforcing sector-wide limits Immunization, for which the World Bank fi nance products. Foremost, there is a for risk-sharing modes of fi nancing and acted as treasury manager, launched fundamental need to build trust and adjustments in risk weights (RWs) and a US$500 million Sukūk facility, the credibility of Islamic fi nance products collaterals; (b) encouraging Islamic proceeds of which were used to fi nance which are based on contracts. One way banks to participate in and develop projects for the Global Alliance for is the standardization and enforcement equity-like fi nancing structures and Vaccines and Immunization. of contracts that would be critical in ensuring banks have in place achieving sustainable growth and appropriate strategies, balance sheet SDGs being addressed by fi nancial stability. With sustainable management tools, and risk and credible Islamic economy, the management techniques; and (c) Islamic ϐinance goals of SDGs can be realized. From a ensuring that certain factors (such as Major areas to which Islamic fi nance can supervisory point of view, minimum taxation) relating to the legal and contribute are ending poverty (SDG- regulation to enforce contracts regulatory environment will not aff ect 1), achieving food security (SDG-2), and adequate commitment to the risk-sharing modes of fi nancing in the ensuring healthy lives (SDG-3), achieving implementation of relevant standards jurisdiction. gender equality (SDG-5), economic are strongly desired. growth (SGD-8) and promoting a peaceful and inclusive society (SDG-16). It is no surprise or arbitrary that the Additionally, innovative Islamic fi nancial longest verse in the longest Surah of instruments such as Sukuk can be used to the Quran (282: Al Baqarah), known mobilize resources to fi nance water and as the verse of debt (Ayat Al Dayn), sanitation projects (SDG-6), sustainable speaks about fi nancial transactions,  and aff ordable energy (SDG-7) and build the rights of the debtor, the approach resilient infrastructure (SDG-9) and of the creditor, justice and equity, To read the rest of this article, please shelter (SDG-11). Islamic philanthropy documentation, witness and evidence, log on to programs such as Zakat (alms), Sadaqat fear of Allah (s.a.w) and being www.islamicfi nancenews.com (charity) and Wakaf (donation) have conscious of Him. played a vital role in social protection

Islamic ϐinance can aid in reviving the Syrian economy post-war

According to GABRIEL OUSSI, it is necessary to defi ne Islamic fi nance in order to introduce this article correctly and most of the jurisconsults and lawmakers have defi ned the Islamic fi nance as follows.

Gabriel Oussi is the authority of a limited number of scholars share capital of new Islamic banks and managing partner and of Shariah, fi qh (jurisprudence) and law Takaful companies in the country. Islamic general manager of Oussi to be appointed by the general assembly banking and fi nance institutions may Law Firm. He can be of the Islamic bank shareholders, the help in integrating the Syrian fi nancial contacted at legal@ purpose of which is to carry out the legal market with mainstream Islamic banking oussilawfi rm.com. control over the activities of the bank and fi nance systems which are rapidly and its contracts to ensure its compliance growing across the Middle East region. The Islamic vision of socioeconomic with the provisions of Islamic Shariah. justice is based on abolishing interest After almost six years of war in Syria and all other exploitative elements The entry of Syria into the Islamic against the IS and other terrorists, almost from the economic sphere. The Islamic banking club is one of the most recent 80% of the infrastructure in Syria have fi nancial system facilitates lending, developments of the Islamic banking been destroyed completely, and the borrowing and investment functions on world. The Syrian parliament approved provision of aid is essential to defeat IS. a risk-sharing basis. This allows market Islamic banking laws in 2005. By the end Ending the confl ict is key to ending the forces to determine the productivity of of 2006, the Syrian government permitt ed war in the country. capital rather than fi xing it in priori as three Islamic banks, namely, Al-Sham an ‘interest rate’ to sabotage the free Bank, Saudi Arabia’s Dalat Al-Baraka It is very clear that in order to rebuild market mechanism and encourage Bank and Syrian International Islamic Syria, the main following steps should speculative use and hoarding of capital. Bank to launch their operations in the be taken: supporting state-building of country whereas six applications for infrastructure, reviving the legitimate The Islamic fi nancial system ensures establishing Islamic banks were under its economy and increasing the presence the optimal rate of capital formulation consideration. of international non-governmental and its effi cient utilization leading to a organizations. sustainable economic growth and fair As for Islamic insurance companies opportunities for all. It is a value-based where the fi rst appearance of an Islamic It is well known that the main sources of system that primarily aims at ensuring insurance company was in 2007, a revenue and employment before the war the moral and material wellbeing of the report issued by the supervisory began – agriculture, the public sector, individual and society as a whole. bureau in 2008 showed that the share small-scale industry and tourism – had of the Islamic insurance company is shrunk dramatically. As a result of the economic development 0.19% of the total insurance market. in the Syrian Arab Republic before 2011, This was mainly due to the poor And in order to revive the Syrian it was a must to have openness toward education about Takaful mainly among economy, Syrian investors should start all economic trends for the sake of the people requesting insurance to come back to the country and pump att racting investments into Syria. One services and the insurance company`s in capital to invest according to Islamic of these trends was Islamic fi nancing. employees. It seems that there is a big fi nance systems. If this happens, major To keep abreast of this development, relation between insurance marketing positive changes are going to occur in the it was necessary to issue the necessary and insurance education which aims to economic sector which will require peace legislations for this purpose. spread Takaful education completely and stability in addition to education and diff ering from commercial insurance training on how to act. One such legislation was the that mainly seeks profi t. Legislative Decree No. 35 of 2005 dated It is important to encourage the 02/05/2005AD, purporting to establish Moreover, three Takaful companies, Islamic fi nancing systems to take part Islamic banks. This decree has defi ned namely Aqeelah Insurance Company, in rebuilding Syria by promoting the Islamic banks as the banks of which Al-Nour Insurance Company and growth and stability of the Islamic the contract of establishing them and Syrian-Qatari Company, are planning to fi nance industry, cooperating with their bylaw include a commitment launch their operations after applying for Islamic banks as well as with national not to practice permissible banking their licenses from the Syrian Insurance and multilateral development fi nance activities on an interest basis, taking or Supervisory Committ ee. Al-Qatar Islamic institutes. giving, and in accordance with banking Insurance Company plans to establish procedures which do not contradict with its subsidiary in Syria. The Syrian The success or failure of Islamic fi nance the provisions of Islamic Shariah either International Islamic Bank, along with in Syria depends on several factors but in accepting deposits and providing its Qatari partners, has applied to launch the main one is to end the war so that other banking services or in the fi eld one Takaful company in Syria. Islamic Syrian investors can come back to Syria of fi nancing or investment. This decree fi nancial institutions and investors and start investing Islamically. also provides for the forming of a legal from the Middle East are underwriting

Robust rating prospects for Islamic ϐinance into the next decade

Growth prospects for Islamic ﬁ nance are strong, as the Islamic banking sector continues to show higher growth. CHRISTIAN DE GUZMAN, SIMON CHEN and NITISH BHOJNAGARWALA opine that this trend should continue well into the next decade.

highlight sound liquidity profi les will be stable, as Malaysia, Indonesia and broad compliance with Basel III and Turkey continue to regularly issue regulatory requirements. long-term sovereign Sukuk, while Gulf countries have favored conventional However, when compared to debt structures to fi nance their defi cit. Christian de Guzman is the vice- conventional peers, Islamic banks in In general, the GCC sovereign Sukuk president and senior credit offi cer some jurisdictions clearly face a shortage market remains dominated by Qatar, the for Moody’s Investors Service’s of Shariah compliant high-quality liquid region’s most active and regular issuer of Sovereign Risk Group; Simon assets (HQLAs), putt ing them at a long-term sovereign Sukuk. Chen is the vice-president and disadvantage. senior offi cer for Moody’s Investors The choice between conventional and Service’s Financial Institutions Islamic issuance depends on the investor Group; and Nitish Bhojnagarwala base. Malaysia has already developed a is an assistant vice-president and Looking ahead, deep and mature Islamic fi nance market, analyst for Moody’s Investors while Indonesia has been the most Service’s Financial Institutions funding for regular issuer of sovereign Sukuk in Group. They can be contacted at international markets. Christian.Deguzman@moodys. Islamic banks will com, [email protected] and In the GCC, deposit growth – and [email protected] continue to beneϔit therefore liquidity levels – has respectively. been higher among Islamic banks from the expansion than conventional banks, but GCC Overall, growth is driven fi rstly by of their retail fi nancial institutions are constrained the persistent eff orts of government by the scarcity of highly rated Shariah agencies and central banks to put in businesses compliant assets, including sovereign place supportive legislation for the Sukuk. industry, and secondly, retail customer demand. In particular, the limited availability of Sub-Saharan African (SSA) sovereigns HQLAs means that large, low-yielding are continuing to ramp up issuance. An example of recent growth in the buff ers of cash or bills are commonly Senegal and Côte d’Ivoire are among a Islamic banking sector is Oman. Over held, posing a persistent profi tability handful of new sovereign Sukuk issuers, the last three years, the sector has gone challenge for Islamic banks in most while Nigeria is stepping up volumes. from zero to an aggregate of around 10% GCC countries when compared to SSA sovereign Sukuk issuance is likely to of Oman’s banking system fi nancing the situation for their counterparts in remain active, as governments set up assets as of June 2016 compared to Malaysia, Indonesia and Qatar, where the regulatory frameworks for a retail Islamic Indonesia and Turkey, which have sovereigns are supportive of the industry banking sector and test the market’s both taken over two decades to reach through the frequent issuance of Sukuk. appetite. around 5% of banking system fi nancing assets. Nevertheless, the governments Looking ahead, funding for Islamic Are you receiving our daily of Indonesia and Turkey have taken banks will continue to benefi t from the IFN Alerts? initiatives to boost growth in the sector expansion of their retail businesses, while the development of domestic Sukuk over the next 10 years. No. markets will improve the banks’ access to In fact, countries in which the penetration HQLAs, further bolstering their LCRs. of Islamic banking assets remains relatively low – at between 5% and 10% As for new Sukuk issuance, the outlook of Islamic fi nancing assets – should see for volumes in 2017 is promising, further growth in their Islamic fi nance with issuance likely from sovereigns, sector. banks and corporates in the Gulf, as regional fi nancing needs increase, amid As for Islamic banks in particular, the historically lower oil prices. The Number ONE news service with liquidity coverage ratios (LCRs) of such over 20,000 registered daily readers banks in key Asian and GCC countries Sovereign Sukuk issuance in particular

program while Maybank Islamic is the capital base as per Basel III’s capital DEALS Shariah adviser. The Sukuk will be used adequacy ratio requirements. to fund Maybank’s investments in ringgit DMO working on debut Sukuk and foreign currency-denominated Reuters reported that the Islamic bank NIGERIA: Debt Management Offi ce Islamic fi nancial instruments and its has selected nine banks to arrange and (DMO) has announced in a public notice subsidiaries and overseas branches’ manage the Tier 1 capital Sukuk off ering that the country is seeking for advisers Islamic business activities as well as other worth up to US$250 million. The banks and trustee fi rms to organize and manage Shariah compliant activities. appointed are Ajman Bank, Bank ABC, its debut sovereign Sukuk. This initiative Emirates NBD, Standard Chartered, Abu comes as an eff ort to establish funding Kuwaiti corporate Sukuk in Dhabi Islamic Bank, KAMCO Investment and reduce budget defi cits. The DMO Company, Kuwait Finance House, Noor also stated that the bids are to be the pipeline Bank and the investment arm of Warba th submitt ed by the 9 January 2017. KUWAIT: The Kuwaiti Capital Markets Bank. Authority (CMA) is considering granting CBB issues Sukuk Ijarah fi nal approval to US$2 billion-worth of EQUATE’s Sukuk program BAHRAIN: The December issue of short- Sukuk and bonds applications by Kuwait term Sukuk Ijarah facility worth BHD26 fi rms, said CMA’s chairman, Nayef al- rated million (US$68.47 million) by the Central Hajraf, who, however, did not specify KUWAIT: EQUATE Petrochemical Co’s Bank of Bahrain (CBB) has been fully whether the issues would be in foreign US$2 billion trust certifi cate issuance subscribed. According to a statement, or local currency, reported Reuters. program (Sukuk program), which will be the expected return on the issue, which Since the new rules covering debt sales issued via Dubai-based SPV, EQUATE begins on the 15th December 2016 and were introduced in 2015, bond issuances Sukuk SPC, has been assigned a matures on the 15th June 2017, is 2.25%. approved by the CMA totaled US$4 provisional ‘(P)Baa2’ rating with a stable billion, while Sukuk off erings reached outlook by Moody’s, according to a The CBB’s monthly Sukuk Salam US$700 million. The authority is also statement. The assigned rating is at the issuance worth BHD43 million working on creating a regulation for a same level as the senior unsecured issuer (US$112.37 million) has also been fully secondary market to trade bonds and rating of EQUATE (‘Baa2/Stable’). The subscribed. Maturing on the 22nd March Sukuk. Kuwait Olefi ns Company, EQUATE’s 2017, the expected return for the 91-day sister company, has, through the Master paper is 2.05%. It has also been reported that the Trust Deed, unconditionally and National Bank of Kuwait (NBK) and irrevocably guaranteed the payment and KAMCO, an investment fi rm, have been performance obligations of EQUATE that Maybank establishes Sukuk invited by the Public Debt Offi ce to are stipulated in the relevant program program participate in a Kuwaiti sovereign bond transaction document. MALAYSIA: Maybank has established issuance. According to Reuters, the a Sukuk program of up to RM10 billion government plans to issue US dollar- DP World Sukuk distributes (US$2.25 billion) in nominal value denominated bonds amounting to US$10 for the issuance of senior Sukuk and/ billion, both conventional and Sukuk, to profit or subordinated Sukuk under the reduce defi cits for the fi scal year ending UAE: DP World Sukuk announced in a principle of Murabahah (via Tawarruq on the 31st March 2017. press release that its periodic profi t arrangement), according to a bourse distribution for its US$1.5 billion 6.25% fi ling. RAM Ratings has assigned the Regulators to approve trust certifi cates due 2017 is confi rmed. A program a long-term rating of ‘AAA’ for coupon worth US$46.88 million was Warba’s Sukuk distributed to trust certifi cate holders on issuances of senior Sukuk Murabahah rd and ‘AA1’ for issuances of subordinated KUWAIT: Warba Bank is in the process the 3 January 2017. Sukuk Murabahah, which will qualify as of securing regulatory approvals from Tier 2 capital. regulators for the issuance of Sukuk Possible Saudi Sukuk sale in Mudarabah of up to US$250 million first quarter Maybank Investment Bank is the with an unlimited duration, according to Mubasher Info. The Sukuk, to be off ered SAUDI ARABIA: Saudi Arabia has principal adviser, lead arranger, lead discussed with banks on the possible manager and bookrunner for the Sukuk in Kuwait, will qualify as the additional Tier 1 capital and support the bank’s sale of Sukuk in the fi rst quarter of 2017

DEAL TRACKER Full Deal Tracker on page 35 EXPECTED DATE COMPANY'S NAME SIZE STRUCTURE ANNOUNCEMENT DATE TBA Sabana Reit US$55.24 million Sukuk 27th December 2016 TBA Kingdom of Saudi Arabia TBA Sukuk 28th December 2016 22nd March 2017 Central Bank of Bahrain US$112.37 million Sukuk Salam 21st December 2016 First quarter of 2017 Warba Bank US$250 million Sukuk 20th December 2016 TBA Nigeria Debt Management TBA Sukuk 19th December 2016 Oﬃ ce TBA EQUATE Petrochemical Co US$2 billion Sukuk 16th Dcember 2016

in a bid to reduce its budget defi cit, reported by Business Times. The between estimated supplementary rental Bloomberg has reported. The conversion would be from SG$1.0131(70 and actual maintenance expenses of the prospective Sukuk would carry diff erent US cents) to 86.28 Singapore cents (60 US underlying assets. The supplementary tenors from the Kingdom’s 10 and cents) per unit and the rights units, rental for the sixth rental period is 30-year bond sale in October, and could which are expected to be issued on the PKR25.62 million (US$240,942). include tenors of seven and 16 years. No 25th January 2017, will be issued at 25.8 defi nitive size or timing on the deal has Singapore cents (17.82 US cents) per been decided yet. rights unit. Fatima Fertilizer’s Sukuk IPO up for subscription Sabana REIT plans to reduce SBP declares sovereign Sukuk PAKISTAN: Meezan Bank has announced in a statement that it is Sukuk price coupon rate off ering a subscription for Fatima SINGAPORE: Sabana REIT has PAKISTAN: The State Bank of Pakistan Fertilizer’s IPO of rated, listed and announced that it will be adjusting the (SBP) has declared the sixth rental secured Sukuk. The Sukuk is priced at conversion price of its SG$80 million coupon rate for the three-year the face value of PKR5,000 (US$47.03) per (US$55.24 million) principle amount of government of Pakistan Sukuk Ijarah, certifi cate and the minimum subscription 4.5% convertible Sukuk due 2017 if the according to Associated Press of amount is also PKR5,000. planned SG$80.2 million (US$55.38 Pakistan. The rate is 3.98% and may be million) rights issue is completed, as adjusted on the basis of the diff erence

ITFC to support African Development (PNDES). According to a AFRICA countries statement, the recent commitment New Islamic banks to open in represents a signifi cant portion of the IDB EGYPT: The Egyptian industry and Group’s total pledge of US$1.3 billion. Morocco trade ministry is looking to cooperating with the International Islamic Trade MOROCCO: The central bank of Morocco CAN wants government to has approved the applications of fi ve new Finance Corporation (ITFC) to prepare an Islamic banks to open and three French integrated strategy to develop its export withdraw from IILM banks to initiate Islamic products in the sector, said its minister, Tarek Kabil, as NIGERIA: Christian Association of country, according to Reuters. This comes reported by Daily News Egypt. Nigeria (CAN) is demanding the in the wake of the new regulations and government to withdraw from initiatives of the government to increase Responding to the initiative, the CEO International Islamic Liquidity fi nancial liquidity and foreign investors. of the ITFC Hani Sonbol, has said that Management Corporation (IILM) on the its Cairo branch will soon communicate basis that the constitution does not allow PBZ inks deal with ICSFS with the ministry in order to understand the country to adopt any religion as state the requirements needed for a joint work religion and therefore should not join any TANZANIA: The People’s Bank of plan implemented according to a specifi c religious institutions. This came in the Zanzibar (PBZ) has signed a deal with ICS timeline. wake of the appointment of the governor Financial Systems (ICSFS) to initiate the of Central Bank of Nigeria, Godwin vendor’s ICS Banks platform. The The ITFC has also pledged US$875 million Emefi ele, as the chairman of IILM. implementation starts in January 2017 and to support Burkina Faso’s National the platform will host PBZ’s conventional Program for Economic and Social and 50%Islamic banking facilities. on REDmoney seminars for past delegates * The discount is applicable for other seminars attended within a 12 month period and is non-transferable.

For more information please contact us at +603 2162 7800 or visit our website at www.REDmoneyevents.com

ecosystem powered by MasterCard’s Islamic ϐinance plans bring ASIA digital wallet solution, Masterpass. The Islamic bank said in a statement that the mixed reactions BI targets Islamic schools to partnership is aimed at building a INDIA: Ventures into Islamic fi nance spur Islamic ϐinance platform for customers to use its have stalled as the Indian government mulls over the plan, according. INDONESIA: Bank Indonesia (BI) will services on-the-go, with online Although a plan was well underway to be working with the nation’s 27,000 purchases and bookings. Meezan Bank introduce the country to the Islamic Islamic boarding schools, or locally- will be the fi rst bank in Pakistan to fi nance market, the proposal was known as pesantren, in a bid to drive its allow linking of customers’ accounts to that of FalconPay Payments. rejected by the Indian fi nance ministry Islamic fi nance industry, according to in December 2016 saying that Islamic Nikkei Asian Review. The central bank, banking was “not relevant” anymore in in collaboration with the Religious BPDS plans rights issue achieving the objectives of fi nancial Aff airs Ministry, intends to assist the INDONESIA: Bank Panin Dubai Syariah inclusion as the government had already business units of pesantren to become (BPDS) is continuing with its plan to raise introduced other programs for all fi nancially independent, in a Shariah at least IDR1 trillion (US$75.2 million) citizens toward that end. compliant manner, as well as introduce through a rights issue in 2017, subject to Islamic fi nance education as part of the shareholder approval, according to Islamic facilities make up schools extracurricular module. BI is Kontan.co.id. The Islamic bank previously currently fi nalizing a roadmap for this intended to conduct the rights issue this 42% of HDFC applications program which it intends to implement year but postponed its plan on the MALDIVES: About 42% of applications early 2017; plans for the program have direction of its shareholders. made to the Housing Development been in the works since 2014. To involve Finance Corporation (HDFC) are for universities and Islamic banks, the Excellent grade for Shariah compliant facilities, according to program, if successful, would be IFN Correspondent Aishath Muneeza. replicated nationwide. Indonesian banking sector Approximately 49% of all applications INDONESIA: The Basel Committ ee are in 2016 were received by HDFC on Banking Supervision (BCBS) has Bankers request Amna, an Islamic fi nancing facility arm awarded the Indonesian banking sector of HFDC, including 7% of applications multicurrency Sukuk for CPEC a ‘compliant’ (C) grade on its Liquidity for the social housing category. PAKISTAN: China Pakistan Economic Coverage Ratio regulations while Corridor (CPEC) presents compelling and a ‘largely compliant’ (LC) grade MBSB to commence merger Islamic fi nance opportunities for Pakistan on the Republic’s capital framework, and Islamic fi nance practitioners are one-notch below the highest grade C, talks with AFB calling for the issuance of multicurrency demonstrating a consistency in the MALAYSIA: Bank Negara Malaysia Sukuk to fund these infrastructure country’s banking regulations, which (BNM) has announced that it has no projects, allowing Pakistani and Chinese have complied with the prevailing objections with the proposed merger investors to hedge potential foreign international banking standards. discussions between Malaysia Building currency risk, according to industry Society (MBSB) and Asian Finance Bank experts at a recent roundtable held by the According to a statement by Otoritas Jasa Berhad (AFB). The negotiations are IBA Center for Excellence in Islamic Keuangan, these grades are expected to expected to be completed in six months Finance. increase public trust in the country’s from the 21st December 2016. banking operation. The Regulatory BRI Syariah to receive capital Consistency Assessment Program is SGX’s gold product certiϐied conducted on all BCBS member countries injection (28 jurisdictions), including Indonesia, to compliant INDONESIA: Bank Rakyat Indonesia see whether the banking regulations SINGAPORE: Singapore Stock Exchange (BRI) will respectively inject IDR500 issued by a country’s authority are (SGX)’s Kilobar Gold Contract has been billion (US$37.32 million) into its consistent with BCBS international certifi ed as Shariah compliant by Amanie Islamic banking arm, BRI Syariah, and banking standards. Advisors, it confi rmed in a statement its fi nancing subsidiary, BRI adding that the product is the world’s Multifi nance, this year, according to fi rst Islamic gold futures. Antaranews.com. BRI has increased its ICD and Perbadanan TAIB to 2017 capital expenditure by 11%, set up Islamic bank Meezan Bank collaborates allocating IDR5 trillion (US$373.16 BRUNEI: The Islamic Corporation for with Al Sadiq Consulting million) to enhance its IT infrastructure the Development of the Private Sector PAKISTAN: Meezan Bank has signed an and IDR4 trillion (US$298.53 million) (ICD) and Perbadanan Tabung Amanah MoU with Al Sadiq Consulting, a for its subsidiary companies and Islam Brunei (Perbadanan TAIB) have China-based Islamic fi nance consulting prospective acquisitions. signed an MoU to explore the establishment of an Islamic banking company, to explore opportunities for Islamic fi nance in the China-Pakistan Meezan Bank to launch digital subsidiary in Brunei, according to a statement. Perbadanan TAIB is a Economic Corridor. The agreement, platform statutory body operating as a savings Meezan said in a statement, focuses on PAKISTAN: Meezan Bank has institution for the Hajj pilgrim, mass the ever-increasing economic partnered with Inov8 to develop the market depositors and off ers simple participation between Pakistan and latt er’s FalconPay Payment’s digital Shariah compliant fi nancing products. China and the opportunities that may be

derived from improved Islamic banking Cash Account, Fixed Deposit Account channels between the two countries. and Ghina Fixed Deposit Account. EUROPE Islamic blockchain research Taqwa Bank announces new Kapital Boost’s structure underway schemes receives Shariah compliance LUXEMBOURG: EETHIQ Advisors have INDIA: Taqwa Credit Cooperative SINGAPORE: Islamic SME crowdfunding announced a strategic partnership with Society has introduced six new Shariah platform Kapital Boost has been certifi ed University of Luxembourg’s SnT compliant schemes, according to Shariah compliant by the Financial Interdisciplinary Centre for Security, Bhatkallys News. The schemes include Advisory & Consultancy, according to a Reliability and Trust, to form a joint internet banking and SMS alerts services, statement. The trade-based fi nancing research program on blockchain Bangalore Commercial and Residential Murabahah structure helps SMEs meet technology and smart contacts for ethical Project, Taqwa Mutual Funds, Smart their short-term needs for asset purchase. and Islamic fi nance.

taking over from the governor of the and market players of the Islamic GLOBAL Central Bank of Eygpt, Tarek Amer. Fazle banking industry with the appropriate NASDAQ Dubai signs MoU Kabir, the governor of Bangladesh Bank, technical guidance to develop, conduct has been named deputy chairman. All and assess stress tests, has been approved with ASE appointments are eff ective from the 1st by the Council of the IFSB, according to a GLOBAL: NASDAQ Dubai and Amman January 2017. statement. Stock Exchange (ASE) have signed an th MoU on the 15 December 2016 as an IFSB translates IFSB-1 into Qinvest inks agreement with eff ort to increase prospective cooperation. According to a press French Maceen Capital statement, the aim for this MoU, among GLOBAL: The IFSB has released its fi rst GLOBAL: Qinvest, an Islamic investment others, is to facilitate collaboration in French translated publication, the bank in Qatar, has signed a strategic terms of knowledge and expertise Guiding Principles of Risk Management distribution agreement with Maceen transfer, possible partnerships through for Institutions (other than insurance Capital, a joint stock investment dual listings and a plausible work institutions) Off ering Islamic Financial organization in Saudi Arabia. Under this agreement between both organizations. Services or IFSB-1, it said in a statement. agreement, Maceen Capital’s clients and The IFSB currently publishes its new qualifi ed investors will have direct Iran and Russia to form joint standards and guiding principles in access to QInvest’s asset management English and Arabic and the translation and advisory platform. This would give Islamic bank into French is part of the IFSB’s Strategic them the opportunity to take part in local GLOBAL: Iranian and Russian banks are Performance Plan 2016-18, refl ecting the and international markets. exploring the mechanism of sett ing up a demand from IFSB French-speaking joint Islamic bank, however no decision member organizations. Sabana REIT talks business has been made yet, said Russian energy with SDH minister Alexander Novak, as reported IDB and Azerbaijan by Tassnim News Agency. According to GLOBAL: Singapore’s Sabana REIT has Novak, fi nancial payments between the collaborate met China’s Sizhuan Development (SDH) two countries tripled in 2016 while trade GLOBAL: The IDB and Azerbaijan to discuss prospective partnership turnover between Tehran and Moscow International Development Agency opportunities, according to a press increased by almost 80%. have signed the Protocol of Intentions release. Both organizations have spoken on cooperation and interaction within on the interest of Chinese investors in IFSB admits new members the framework of South-South Program, tapping into the Islamic fi nance market aiming at cooperation, exchange of in the countries that are in the path of the GLOBAL: The IFSB confi rmed in a experience and knowledge as well as Silk Road initiative. statement that it has admitt ed seven organization of seminars and trainings, organizations as members. The central according to ABC.az. banks of Iraq and Mauritania have joined Shuaa Capital acquires stake the IFSB as full members; the Capital Separately, the Islamic Corporation for in KHCB Markets Authority of Kenya, Turkish the Development of the Private Sector, GLOBAL: UAE-based Shuaa Capital has Undersecretariat of Treasury and the whose portfolio in Azerbaijan worth acquired a 14.01% stake (147.12 million Regional Council for Public Savings US$130 million, held talks with the State shares) in Bahrain’s Shariah compliant and Financial Markets of the West Housing Agency to participate in the Khaleeji Commercial Bank (KHCB), African Monetary Union as associate construction of social housing. confi rmed the latt er’s parent GFH in a members; and Somalia’s Dahabshil statement. Bank International and Turkish Capital IFSB adopts TN-2 Markets Association as observer QIIB focuses on Moroccon members. GLOBAL: The adoption of a new Technical Note on Stress Testing for operation The IFSB also confi rmed that is has Institutions Off ering Islamic Financial GLOBAL: Qatar International Islamic appointed Dr Valiollah Seif, the governor Services (TN-2), aiming to provide Bank (QIIB) will be focusing fully on of the Central Bank of Iran, as chairman regulatory and supervisory authorities sett ing up its operations in Morocco and

© 28 4th January 2017 NEWS has no other overseas investment plans, SC and OCIS announce visiting especially Islamic capital markets. The said its deputy CEO, Jamal Abdullah Al selected scholar will take up residence in Jamal, reported The Peninsula. The fellowship program Oxford commencing October 2017 for the Moroccan project, which is expected to GLOBAL: Securities Commission of academic year 2017/18, to conduct begin operations by early next year, is Malaysia (SC) and Oxford Center for research relating to the development of still subject to approvals from concerned Islamic Studies (OCIS) have opened Islamic fi nance on a topic of local authorities, including Bank Al- applications for the sixth Visiting contemporary relevance to this fi eld, and Maghrib. QIIB in December last year Fellowship under the Scholar in to participate in a range of academic Residence Program for 2017; applications entered into an agreement with CIH th activities at OCIS. Bank to set up a bank in Morocco, with will be accepted until the 20 January. QIIB taking a 40% stakes in the new This program aims to research and bank. develop relevant areas of Islamic fi nance,

intends to align with UAE Vision 2021 Bank, Iraqi Islamic Bank, South Islamic MIDDLE EAST and Dubai Plan 2021 among others. Bank and Zain Iraq Islamic. StanChart launches new Islamic account ITFC to pilot SME program in CMA awards Investment UAE: Standard Chartered Bank has Saudi license to Gulf Bank launched the Saadiq Savings Accounts, SAUDI ARABIA: The International KUWAIT: Gulf Bank, which off ers an Islamic savings facility, on the 18th Islamic Trade Finance Corporation Shariah compliant fi nancial services, has December 2016. The bank said in a (ITFC) confi rmed in a statement that it announced that it is the fi rst bank in the statement that the account caters to the has signed an engagement agreement country to obtain an investment license daily banking needs of its institutional with the Catalyst Group on the 14th from the Capital Market Authority and corporate clients and acts as a December 2016 to initiate an SME trade (CMA). The license, which is valid for means to acquire revenue in compliance development program in Saudi Arabia. three years from the date of issuance, with Shariah. In line with Saudi’s Vision 2030 SMEs will allow the bank to manage portfolios Trade Development Program, this and act as custodian, investment KFH launches new initiatives agreement is expected to enhance SME controller and subscription agent among others. KUWAIT: Kuwait Finance House awareness and ventures in the country (KFH) in a statement announced and eventually in other countries in the the commencement of their latest region as well. MEAHCO signs agreement initiative, ATM Systems for the Blinds. with SAMBA It comprises of 10 fully monitored ATMs Alizz Islamic Bank expands SAUDI ARABIA: Middle East designed for the blind, and is installed operations Healthcare Co (MEAHCO) has signed in various parts of the country as an OMAN: Alizz Islamic Bank has opened an Islamic fi nancing agreement with eff ort to reach out to customers’ special its fourth branch in the Muscat SAMBA Financial Group, according to a needs. Specifi cations of the system Sultanate, making it the seventh in the bourse fi ling. The SAR300 million include voice recognition and Braille country, according to Times of Oman. (US$79.92 million) facility will be used typing facilities. Located in Athaiba, the bank aspires to to fund the development of MEAHCO’s cater to the increasing clientele on Saudi German Hospital. The Islamic has also established a banking services; and provide Shariah Audit Program for the group Masraf Rayan announces level including staff from Turkey, accessibility and comfort to the people Bahrain, Malaysia and Kuwait. of the region. The bank has also recently suspension of ARB According to a media release, the launched an SME banking service, QATAR: Masraf Al Rayan has program aspires to increase and focusing on businesses more than three announced the shutdown of its exchange knowledge and expertise years old and in need of immediate brokerage window, Al Rayan Financial among staff , with a focus on the assistance, according to Gulf Base. Brokerage Company (ARB), and its signifi cance of Shariah in the license issued by the Qatar Financial management of Islamic fi nance, Iraqi Islamic banks to list Markets Authority, according to a banking, goals and visions. shares bourse fi ling. The last trading date will be the 12th January 2017. The company IRAQ: The Central Bank of Iraq (CBI) did not provide a reason for the MoF signs an MoU with DIEDC has issued instructions to banks — both termination. UAE: The Ministry of Finance (MoF) has Islamic and conventional — to list their signed an MoU with Dubai Islamic shares on the stock exchange market 30 Economy Development Center (DIEDC), days from the 14th December 2016 or risk Trio merger anticipated according to a press release. This losing access to the forex market. The QATAR: Barwa Bank, Masraf Al Rayan initiative is targeted to build and regulator said in a statement that this and International Bank of Qatar (IBQ) enhance experience and information measure is to enhance domestic and have initiated negotiations on a sharing among both institutions in line foreign investments into the country. potential merger that would create a with the Dubai the Capital of Islamic The Islamic banks requested to comply single Islamic bank with assets of over Economy 2017-21 plan, which DIEDC are Al Bilad Bank, Al Huda Bank, Cihan QAR160 billion (US$43.91 billion), the

second-largest bank in the Gulf, billion (US$532.91 million) and is Dhofar Beverage and Foodstuff , Gulf according to Reuters. The merger, if expected to fund operating and capital International Chemicals and Gulf approved, will see IBQ converting its budgets, confi rmed a statement. Mushroom Products among others. operations to being Shariah compliant. Ezdan secures Islamic facility Noor Al Iraq Bank goes online Al Hammadi inks Islamic QATAR: Ezdan Holding Group has IRAQ: ICS Financial System announced ϐinancing agreement secured an Islamic fi nancing facility in a press release that Noor Al Iraq Bank SAUDI ARABIA: Al Hammadi worth US$460 million, confi rmed has implemented its ICS Banks Islamic Company for Development and Dentons in a statement. The law fi rm software system. With a test Investment has signed an Islamic advised the Qatari conglomerate on the implementation for the past two fi nancing facility agreement with Arab deal. months, the institution announced that National Bank (ANB), as announced in a the bank has adapted the service in the bourse fi ling. The facility, worth MSM identiϐies Shariah areas of core banking, credit facilities & SAR312.5 million (US$83.21 million), is risk groups and remitt ances among compliant ϐirms others. to refi nance the company’s current OMAN: Muscat Securities Market fi nancing facilities with bett er terms and (MSM) has updated its list of Shariah conditions compared to existing compliant securities based on the QIB goes online with Temenos facilities as well as to enhance working fi nancial performance of companies in QATAR: Qatar Islamic Bank (QIB) has capital to support growing business the third quarter in line with AAOIFI successfully adapted Temenos’s operations. guidelines. The bourse confi rmed in a IslamicSuite package, as reported by IBS circular that 34 companies are certifi ed Intelligence. Temenos, a solution Mobily inks CFA with Alinma as Shariah compliant. These fi rms provider for the banking industry, has Bank include Al Anwar Ceramic Tiles, Al been working with QIB for two years Batinah Development, Al Jazeira and the new IslamicSuite package will SAUDI ARABIA: Etihad Etisalat Co cover the bank’s core banking, all (Mobily) has signed an Islamic credit Services, Al Madina Takaful, Al Maha Ceramics, Al Izz Islamic Bank, Bank business lines and a number of middle facility agreement (CFA) with Alinma offi ce and periphery systems. Bank. The agreement is worth SAR2 Nizwa, Computer Stationaries Industry,

payment relating to the year 2016. of assets and business by RCCS to RCI, According to a statement, based on the appointment is eff ective from the 1st ASSET Emirates REIT’s closing share price of January 2017. US$1.15 on the 14th December, this MANAGEMENT represents an annualized dividend yield Sabana REIT proposes new Al Meezan offers Meezan of 7%. The Shariah compliant fi rm also intends to continue to distribute property acquisition Energy Fund dividends to its shareholders twice a SINGAPORE: Sabana REIT is proposing PAKISTAN: Shariah compliant Al year. to buy the property located at 107 Eunos Meezan Investment Management (Al Avenue 3 from General Cars Fleet Meezan) has added a new fund category HMML to transfer stakes in Management for the total cost of the to its product suite in the form of Meezan acquisition of approximately SG$36.1 Energy Fund, a sector-specifi c equity FHM to HMMMC million (US$25.06 million) and has fund aiming to benefi t from the growth PAKISTAN: Habib Modaraba entered into a conditional put and call in Pakistan’s energy sector, according to Management (HMML) has entered into option with the latt er via HSBC a statement. an agreement to transfer its management Institutional Trust Services, according to rights along with 10% of certifi cates in a statement. MCB-AH launches AlHamra First Habib Modaraba (FHM) to Habib Metropolitan Modaraba Management PAKISTAN: MCB-Arif Habib Savings Islamic fund for diamond Company (HMMMC), subject to and Investments (MCB-AH) has completion of remaining statutory mining projects launched its Islamic investment division formalities and fi nal regulatory approval, GLOBAL: Citigate International, a known as AlHamra in response to according to a statement. Dubai-based fi nancial consultancy demand from customers for Islamic company, has closed a secured Shariah fi nancial solutions, according to a press compliant fund — Safa Afrique — raising release. New property manager for US$10 million from GCC investors to be KLCC REIT deployed in the fund’s diamond mining Emirates REIT to make ϐirst MALAYSIA: Rahim & Co International portfolio which primarily consists of a interim dividend payment (RCI) has been appointed as the new fl agship project in Sierra Leone and two property manager for Shariah compliant joint venture projects in Guinea and UAE: Emirates REIT (CEIC) has KLCC Real Estate Investment Trust Liberia with Stellar Diamonds. According announced an interim dividend of (KLCC REIT), according to a bourse to Arabian Business, the redemption date US$11.98 million or US$0.04 per share, fi ling. Taking over from Rahim & Co for all investors will be on December which will be paid on or before the 31st Chartered Surveyors (RCCS) following January 2017 — the fi rst dividend 2019. the completion of an exercise on transfer

PBIC to sell stake in PIML has entered into an agreement with according to a statement. PIML is a PAKISTAN: Pak Brunei Investment Army Welfare Trust (AWT) for the sale of non-banking ﬁ nance company in Company (PBIC), the parent company of its 70% shareholding in PIML to AWT, Pakistan which manages Islamic and Primus Investment Management (PIML), subject to regulatory approvals, conventional funds.

Arab Islamic Takaful ϐirm negatively impact both institutions. TAKAFUL launched Solidarity Takaful has also announced Ayady Karissa Takaful the appointment of Al Rajhi Capital as its KUWAIT: A new Takaful fi rm, the Arab fi nancial advisor. Solidarity said that launched Islamic Company for Takaful Insurance, future developments would be MALDIVES: The National Disaster has been launched with capital worth announced in time. Management Center (NDMC) and Ayady KWD5 million (US$16.3 million), according to Kuwait Al-Yaum. The fi rm Takaful have launched a new Takaful Ajman Bank establishes initiative for natural disasters, known as is set to manage all forms of local the Ayady Karissa Takaful scheme, insurance and reinsurance, besides life bancaTakaful partnership according to a statement. The scheme insurance both local and abroad. UAE: Ajman Bank, in a statement will cover natural disasters and fi re confi rmed that it has entered into a incidents and provide compensation for GlobeMed and ETIC sign TPA bancaTakaful agreement with Takaful th infrastructural and structural damages to EGYPT: GlobeMed and Egyptian Takaful Emarat on the 18 December 2016. This buildings and properties. Insurance Company (ETIC) have signed agreement is aspired to seal Takaful a third party administration agreement Emarat’s insurance services for the Pos Malaysia and Etiqa (TPA) which will see Egyptian Life customers of Ajman Bank and to nurture Takaful benefi t from GlobeMed’s prospective collaboration between both Takaful teams up healthcare benefi ts management institutions in the future. MALAYSIA: Pos Malaysia has teamed experience and technology to streamline up with Etiqa Takaful to off er a new and optimize delivery of health services Enaya to cut statutory deposit Family Takaful plan, Pos Khairat to insured members. SAUDI ARABIA: Saudi Enaya Takaful, which will be available at 700 of Cooperative Insurance Company (Enaya) its branches nationwide, according to Solidarity Takaful appoints has received a lett er of no objection from The Star Online. The national postal the Saudi Arabian Monetary Authority to service expects to lift its revenue between new advisor reduce its statutory deposit, according to 10-15% next year from premiums worth SAUDI ARABIA: Sanad Al Wakalah has a bourse fi ling. The deposit will be cut to RM10 million (US$2.25 million) to be requested to terminate its contract with SAR30 million (US$7.99 million) from generated through the Family Takaful Solidarity Takaful, according to a bourse SAR40 million (US$10.65 million). plan. fi ling. This termination is expected to not

SHARIAH REQUIREMENTS AND ARRANGEMENTS FOR ISLAMIC FINANCIAL PRODUCTS & FEATURES • Tawarruq • Waad • Rahn

18th January 2017, InterContinental, Kuala Lumpur

Bank Negara Malaysia recently released detailed Shariah guidelines, requirements and optional practices and arrangements for various Islamic financial contracts, products and features. Following on from this, banks and financial institutions will be required to submit action plans based around these requirements and practices. As such, a great deal of important information gathering and analysis will have to take place in a relatively short period of time. SIDC CPE - accredited: 10 CPE Points

REDmoney Seminars is pleased to offer an insightful, concise and incisive update on the Shariah standards and requirements, optional REGISTER NOW practices and arrangements for Tawarruq, Waad and Rahn. Industry experts will cover the most important elements of each, and will www.REDmoneyevents.com identify key areas for attention and action.

Panel Speakers: Mohd Faris Ghazali Mohd Johan Lee Associate Professor Dr Rusni Hassan Deputy Manager, Shariah Risk Managing Partner, Deputy Dean IIUM Institute of Banking & Finance Management, Bank Islam Malaysia J Lee & Associates and member, Shariah Advisory Council, Bank Negara Malaysia

into consideration Malaysia Airports’ from stable by AM Best, which also RATINGS performance that has exceeded reaffi rmed the fi nancial strength rating expectation for 2016 among others. (FSR) of ‘B++(Good)’ and the long-term QRMSB receives preliminary ICRs of ‘bbb+’ of the two subsidiaries. ratings ‘AA-IS’ for MMC’s Sukuk The outlook on the FSR is stable. MALAYSIA: RAM has assigned an ‘AA1’ rating to Quill Retail Malls (QRMSB) program According to a statement, the rating proposed RM200 million (US$44.58 MALAYSIA: MMC Corporation’s RM1.5 actions take into consideration further million) Class A, ‘AA3’ to its RM70 billion (US$337.99 million) Sukuk deterioration to their business profi les. million (US$15.6 million) Class B, ‘A2’ to Murabahah program has been affi rmed The rating agency also noted that the its RM50 million (US$11.15 million) Class at ‘AA-IS’ with a stable outlook by signifi cant Qard Hassan write-off s in C and ‘A3’ to its RM30 million (US$6.69 MARC. According to a statement, the ACR ReTakaful MEA’s and ACR million) Class D Sukuk Murabahah, rating is driven by MMC’s sizeable ReTakaful’s shareholder funds refl ect a according to a press release. These Sukuk business operations and strong lack of confi dence in these companies’ are part of QRMSB’s plans to fund the competitive position in three key ability to build commercially viable development of the mall. businesses namely port and logistics, underwriting portfolios. AM Best has energy and utilities, and engineering and also revised the long-term ICR outlook to Preliminary ratings for construction. The rating also aff ects the negative from stable and affi rmed the fi rm’s outstanding Sukuk of RM1.3 long-term ICR of “bb+” of UAE-based TMSB’s senior Sukuk billion (US$292.92 million) issued as at ACR ReTakaful Holdings. MALAYSIA: RAM in a statement the 30th November 2016. announced preliminary ratings of ‘AA1/ Suria KLCC retains Sukuk Stable’ to TRIplc Medical (TMSB)’s JIB’s ratings afϐirmed proposed RM639 million (US$14.26 ratings JORDAN: The long and short-term million) senior Sukuk Murabahah. TMSB MALAYSIA: RAM has reaffi rmed the foreign currency ratings (FCRs) of Jordan has a 25-year concession agreement with ‘AAA/Stable/P1’ ratings on Suria KLCC’s Universiti Teknologi MARA and the Islamic Bank (JIB) have been affi rmed at Sukuk Murabahah program of up to government of Malaysia to build and ‘BB-’ and ‘B’ respectively with a stable RM600 million (US$135.2 million), manage a teaching hospital and a outlook by Capital Intelligence. The according to a statement. The ratings are medical academic complex in the rating agency in a statement noted that premised on the company’s superior country. these ratings are constrained by the earnings and fi nancial metrics that have ratings assigned to Jordan (‘BB-/B/ remained resilient despite weaker MARC afϐirms JEP’s Sukuk Stable’), refl ecting JIB’s base of operations consumer sentiment and keener in the Kingdom and its exposure to the competition within the retail sector, rating sovereign in the form of balances at the underscored by the superior asset quality MALAYSIA: Jimah East Power (JEP)’s Central Bank of Jordan (CBJ), as well as of its core asset — Suria KLCC — as well RM8.98 billion (US$2 billion) Sukuk high exposure to a state-controlled entity. as its conservative balance sheet and Murabahah facility has been affi rmed at The support rating remains at ‘3’ in view superior debt-protection measures. ‘AA-IS’ by MARC with a stable outlook. of the demonstrated support from the According to a statement, the rating takes parent, Al Baraka Banking Group, as well Fitch downgrades six Omani into account the project’s manageable as the high likelihood of support from cash fl ow and repayment profi le; and is CBJ if needed. JIB’s fi nancial strength banks controlled by risks contributed by rating is maintained at ‘BBB-’ with a OMAN: Fitch has downgraded the technology and cost managements. JEP stable outlook. long-term foreign currency issuer default was established to develop, design, ratings (IDR) of Ahli Bank, Bank Dhofar, construct and operate a 2x1,000- Bank Sohar and National Bank of Oman megawatt ultra-supercritical coal-fi red RAM reafϐirms Maybank to ‘BBB-’ from ‘BBB’ refl ecting a change power plant under a 25-year power Islamic’s ratings in the rating agency’s assessment of purchase agreement with Tenaga MALAYSIA: RAM in a statement said Oman’s ability to support its domestic Nasional. that it has reaffi rmed Maybank Islamic’s banks. According to a statement, the fi nancial institution rating of ‘AAA/ long-term foreign currency IDRs of Bank Malaysia Airports retains Stable/P1’ and also the ‘AA1/Stable’ rating Muscat and HSBC Bank Oman have also on its RM10 billion (US$2.25 billion) been downgraded to ‘BBB’ from ‘BBB+’ RAM ratings subordinated Sukuk Murabahah and to ‘A’ from ‘A+’ respectively. MALAYSIA: In a press release, RAM has program, refl ecting the rating agency’s reaffi rmed their ratings on Malaysia expectation of ready support from its AFC Sukuk assigned ‘(P)A3’ Airports’s RM2.5 billion (US$557.97 parent, Maybank, if required. million) senior Sukuk program rating (2013/2033) at ‘AAA’ and RM2.5 billion NIGERIA: Moody’s has assigned a perpetual subordinated Sukuk program ACR ReTakaful Holdings provisional ‘(P)A3’ senior unsecured (2014/2114) at ‘AA2’. Other reaffi rmed revised to negative rating to Africa Finance Corporation ratings include RM3.1 billion (US$691.88 GLOBAL: The long-term issuer (AFC)’s Sukuk issued via its SPV, AFC million) Islamic medium-term note credit rating (ICR) of the Bahraini and Sukuk Company, according to a program at ‘AAA(s)’ and RM1 billion Malaysian subsidiaries of ACR ReTakaful statement. The rating refl ects AFC’s (US$223.19 million) Islamic commercial Holdings: ACR ReTakaful MEA and ACR sound capital adequacy and high paper program at ‘P1’. The ratings take ReTakaful, have been revised to negative liquidity with the challenges posed by a

planned expansion that will likely expose fi scal ability and external fi nancial reaffi rmation is att ributed to the country’s it to economic and political risk. management, according to a press sovereign abilities, reserve capacity, release. This reaffi rmation is also economic development among others. CIMB Islamic maintains ‘AAA/ contributed by a net asset of Qatar is also one of the only two nations approximately fi ve times its GDP and that announced a fi scal surplus for the Stable/P1’ ratings the registration of fi scal surplus of 0.7% year of 2015. MALAYSIA: RAM has reaffi rmed CIMB GDP in 2016. The country also managed Islamic Bank’s ‘AAA/Stable/P1’ fi nancial the uncertain energy price risks and RAM maintain PASB’s Sukuk institution ratings, according to a credit deterioration with its sovereign statement. The rating refl ects the bank’s reserves. rating strategic importance as the Islamic MALAYSIA: RAM has reaffi rmed the banking arm of CIMB Group Holdings ‘AAA/Stable’ rating on Pengurusan Air and also its strong capitalization which Lafarge’s Sukuk receives ‘AA2’ SPV (PASB)’s RM20 billion (US$4.47 provides the bank with a suffi cient buff er MALAYSIA: Lafarge Cement’s proposed billion) Islamic medium-term note against potential credit losses amid the Sukuk Wakalah program (2017/2024) program, according to a statement. PASB more challenging operating landscape. worth up to RM500 million (US$111.62 is an SPV set up as a wholly-owned million) has been assigned ‘AA2/Stable/ subsidiary of Pengurusan Aset Air Indonesia’s ratings upgraded P1’ ratings by RAM which also (PAAB). The rating refl ects PAAB’s reaffi rmed Lafarge Malaysia’s RM350 strategic role pursuant to the Water INDONESIA: Fitch in a statement noted million (US$78.14 million) Islamic that it has revised its outlook on Services Industry Act 2006, which is securities program (2010/2017) at ‘AA2/ aimed at restructuring the water-services Indonesia’s long-term foreign and local Stable/P1’. currency issuer default ratings (IDRs) to industry by consolidating the ownership positive, with both ratings affi rmed at of and responsibility for water assets in ‘BBB-‘. The country’s senior unsecured RAM downgrades Al Bayan’s Peninsular Malaysia and the Federal Sukuk have also received the same Sukuk Territory of Labuan. ratings at ‘BBB-‘. The country ceiling, MALAYSIA: Al Bayan Holding’s RM1 short-term currency IDRs and the senior billion (US$223.34 million) Sukuk RAM maintains BGSM unsecured short-term rating have been Wakalah rating has been downgraded to Management’s Sukuk rating affi rmed at ‘F3’. ‘D’ from ‘C1’ by RAM. The rating agency MALAYSIA: RAM has reaffi rmed the said in a statement that this downgrade ‘AA3’ rating of BGSM Management’s Kesturi’s Sukuk ratings comes in wake of the company’s failure RM10 billion (US$2.23 billion) Sukuk, as reafϐirmed to redeem RM100 million (US$223,334) of announced in a press release. The rating outstanding Sukuk which matured on is refl ected by the fi rm presence of Maxis, MALAYSIA: MARC has announced in a the 16th December 2016. statement that Konsortium Lebuhraya BGSM Management‘s sole subsidiary, in Utara Timur (Kesturi)’s RM2.3 billion the country’s telecommunications service (US$513.47 million) senior Sukuk facility Positive outlook for HLISB providers market. has been reaffi rmed at ‘AA-‘ whereas its MALAYSIA: RAM confi rmed in a RM180 million (US$40.18 million) junior statement that it has assigned a positive AmBank Islamic retains ‘AA2’ Sukuk paper has been reaffi rmed at ‘A-‘. outlook on Hong Leong Islamic Bank ratings Both ratings received a stable outlook. (HLISB)’s ‘AA1’ fi nancial institution rating and ‘AA2’ rating for its RM1 billion MALAYSIA: RAM has maintained its (US$223.34 million) subordinated Sukuk rating on AmBank Islamic at ‘AA2’, as NTIC rating withdrawn Ijarah program. This came as eff ect to the announced in a press release. It has also KUWAIT: Moody’s has withdrawn the positive outlook rating of its parent, reaffi rmed its ‘AA2’ rating on the bank’s ‘Ba1’ rating on National Takaful Hong Leong Bank. RM3 billion (US$668.77 million) senior Insurance Company(NTIC) on the 21st Sukuk Musyarakah and ‘AA3’ ratings on December 2016 due to Moody’s own RM2 billion (US$445.84 million) business reasons, it said in a statement. Qatar retains sovereign subordinated Sukuk Musyarakah and ratings RM3 billion (US$668.77 million) Kuwait retains ‘AA3’ rating QATAR: RAM has reaffi rmed Qatar’s subordinated Sukuk Murabahah. All KUWAIT: RAM has reaffi rmed its ‘AA3’ global sovereign rating at ‘AA3’ and ratings carry a stable outlook. rating on Kuwait, based on the nation’s ASEAN sovereign rating at ‘AAA’, according a press release. This

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Over 6,955 individual companies directly involved in the Islamic ﬁ nance industry

Regional Board, while Anita Yadav, the Hassan, previously the chairman of the MOVES senior director for global markets and Securities and Exchange Commission, IILM treasury and head of fi xed income has been appointed as the new chairman. research of Emirates NBD, has been The news members are Ahmad Saeed, MALAYSIA: Professor Rifaat Ahmed appointed as the acting vice-chair, Muhammad Naeem, Faresa Jafarey Abdel Karim has resigned as the CEO according to a statement. Ahsan, Shahid Ghaff ar, Tariq Iqbal of the International Islamic Liquidity Khan and Asif Usman. Management Corporation (IILM), the corporation announced in a press release. Alawwal Bank Abdoul Aziz Ba, the Executive Director SAUDI ARABIA: Alawwal Bank has SABB Takaful Co of Business Operations, would be the announced in a statement that Mubarak SAUDI ARABIA: Saudi Arabia British acting CEO eff ective the 1st January 2017. Abdullah Khafrah and Lubna Sulaiman Bank (SABB) Takaful Co in a bourse Olayan would return as its chairman and fi ling has announced the resignation of vice-chairman respectively. The board Earlier, Godwin Emefi ele, the governor its non-executive board member, David members have also been reinstated for of the Central Bank of Nigeria, has been Kenney, and the appointment of Chief the next term which ends on 2019. appointed as IILM’s new chairman on the Risk Offi cer Richard Hinchley (subject to approval) as a non-executive board 15th December 2016, according to a member. statement. With this appointment, he will Watania be chairing the General Assembly of UAE: National Takaful Co (Watania) IILM and also the IDB. issued a statement confi rming that its Reserve Bank of India chairman, Khaled Khoori, has stepped INDIA: The Reserve Bank has announced down due to his professional Al Rayan Bank in a press release that Dr Viral V Acharya commitments; Khaled is also the CEO of has been appointed as the new deputy UK: Al Rayan Bank informed IFN that it Al Hilal Bank and a board member of Al governor eff ective the 20th January 2016. has appointed Venkat Chandrasekar as Hilal Takaful Company. Vice Chairman Acharya would be in charge of the bank’s its new COO. Chandrasekar previously Abdul Rahman Awad Ba Omar will take Monetary Policy and Research cluster for held a number of senior positions in over the chairman’s responsibility in the a term of three years. Citibank including leading the bank’s interim until the vacancy is fi lled. European operations for international Khaleeji Commercial Bank personal banking and wealth business Kuwait International Bank BAHRAIN: Shariah compliant Khaleeji management business. KUWAIT: Kuwait International Bank, Commercial Bank announced in a press which off ers Islamic fi nance services, release that its board member, Mohamed AmBank announced in a press release that Ahmad Barrak Al Mutair, has resigned eff ective MALAYSIA: Raja Teh Maimunah Raja AlKazemi has been appointed as its new the 25th December 2016. Announcement Abdul Aziz, CEO of Hong Leong Islamic general manager for the Commercial regarding his replacement has not been Bank, is set to head AmBank Group’s Banking Department. Ahmad was made. investment banking business sometime previously the deputy general manager this year pending regulatory approval, and acting general manager of the Saudi British Bank according to the Business Times. Corporate Banking Department at Gulf SAUDI ARABIA: Saudi British Bank Bank. appointed Khalid Sulaiman Olayan as Gulf Bond and Sukuk its chairman and Khalid Abdullah Audit Oversight Board of Almolhem as vice–chairman, according Association to a bourse fi ling. Members of the board UAE: Gulf Bond and Sukuk Association Pakistan subcommitt ees including executive (GBSA) has appointed Emirates NBD’s PAKISTAN: The Pakistani government committ ee, remuneration and managing director and global head of has elected a new chairman and nomination committ ee and risk debt origination and distribution, Andy members for the Audit Oversight Board, committ ee were also appointed. Cairns, as the new chairman of the GBSA according to a press statement. Dr Tariq

Expected date Company's name Size Structure Announcement Date TBA Sabana Reit US$55.24 million Sukuk 27th December 2016 TBA Kingdom of Saudi Arabia TBA Sukuk 28th December 2016 22nd March 2017 Central Bank of Bahrain US$112.37 million Sukuk Salam 21st December 2016 First quarter of 2017 Warba Bank US$250 million Sukuk 20th December 2016 TBA Nigeria Debt Management Oﬃ ce TBA Sukuk 19th December 2016 TBA EQUATE Petrochemical Co US$2 billion Sukuk 16th Dcember 2016 First quarter of 2017 Al Baraka Banking Group US$300 million Sukuk 7th December 2016 TBA ACWA Power up to US$1 billion Sukuk 6th December 2016 20th December 2016 Bank Syariah Mandiri IDR1 trillion Sukuk 24th November 2016 TBA TRIplc Medical up to RM639 million Sukuk Murabahah 16th November TBA Sichuan Development Holdings US$300 million Sukuk 4th November 2016 TBA Warba Bank US$250 million Sukuk 3rd November 2016 First quarter of 2017 National Real Estate Company US$500 million Sukuk 25th October 2016 TBA Housing Development Finance TBA Sukuk 13th October 2016 Corporation of Maldives TBA APM Automotive Holdings up to RM1.5 billion Sukuk Murabahah 11th October 2016 TBA Shatel IRR10 trillion Sukuk Murabahah 10th October 2016 2017 Muhammadiyah up to IDR1 trillion Sukuk 28 th September 2016 TBA Aktif Bank TRY25 million Sukuk Murabahah 26th August 2016 TBA Widad Capital up to RM110 million Sukuk Murabahah 23rd August 2016 First quarter of 2017 Government of Nigeria TBA Sukuk 11th August 2016 Fourth quarter of 2016 Malaysia Debt Ventures up to RM1 billion Sukuk 4th August 2016 TBA DanaInfra Nasional RM10 billion Sukuk 19th July 2016 First quarter of 2017 Government of Kuwait up to KWD5 billion Sukuk 4th July 2016 TBA Iranian Mines and Mining IRR4 trillion Sukuk Musharakah 24th June 2016 Industries Development and Renovation Organization TBA Tiga Pilar Sejahtera Food IDR1.5 trillion Sukuk 17th June 2016 TBA Almarai Company TBA Sukuk 10th June 2016 By the end of 2017 Ministry of Housing Saudi TBA Sukuk 9th June 2016 Arabia TBA Mahan Air IRR5 trillion Sukuk Ijarah 8th June 2016 TBA The Philippines TBA Sukuk 6th June 2016 TBA GFH Financial Group US$150 million Sukuk 2nd June 2016 TBA Government of Sri Lanka US$1 billion Sukuk 27th May 2016 TBA Saudi Aramco TBA Sukuk 26th May 2016 TBA Al-Tajamaout for Touristic JOD45 million Sukuk Ijarah 24th May 2016 Projects TBA Societe Generale RM1 billion Sukuk 23rd May 2016 TBA Bank Muamalat Malaysia RM1 billion Sukuk Murabahah 23rd May 2016 TBA Bank Rakyat Malaysia RM5 billion Sukuk Murabahah 20th May 2016 TBA Government of Germany US$1 billion Sukuk 18th May 2016 By 2017 Republic of Maldives TBA Sukuk 29th April 2016 Second half of 2016 Saudia up to SAR5 billion Sukuk 26th April 2016 TBA PRAN Foods BDT1 billion Sukuk 11th April 2016 Fourth quarter of 2016 Bank Syariah Mandiri IDR1 trillion Sukuk 5th April 2016 2016-17 Sarana Multigriya Finansial IDR200 billion Sukuk 4th March 2016 TBA Ziraat Participation Bank TRY1.5 billion Sukuk 1st March 2016 TBA Hong Kong TBA Sukuk 1st March 2016 TBA Saudi Electricity Company US$2.5 billion Sukuk 16th February 2016

REDmoney Asia ex. Japan 6 Months REDmoney Europe 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 2500 1650

2090 1460

1680 1270

1270 1080

860 890

450 700 Jun Jul Aug Sep Oct Nov Jun Jul Aug Sep Oct Nov

REDmoney GCC 6 Months REDmoney Global 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 1300 2200

1130 1896

960 1592

790 1288

620 984

450 680 Jun Jul Aug Sep Oct Nov Jun Jul Aug Sep Oct Nov

REDmoney MENA 6 Months REDmoney US 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 1150 2250

1000 1960

850 1670

700 1380

550 1090

400 800 Jun Jul Aug Sep Oct Nov Jun Jul Aug Sep Oct Nov

SAMI Halal Food Participation (All Cap) 6 months

2250

2110

1970

1830

1690

1550 Aug-2016 Sep-2016 Oct-2016 Nov-2016 Dec-2016 Jan-2017

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 1550 1650

1330 1400

1110 1150

890 900

670 650

450 400 Jun Jul Aug Sep Oct Nov Jun Jul Aug Sep 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 2250 2450

1900 2060

1550 1670

1200 1280

850 890

500 500 Jun Jul Aug Sep Oct Nov Jun Jul Aug Sep Oct Nov

REDmoney Global Shariah

Equities are considered eligible for inclusion Utilities Basis Materials Telecomunication Services 2% 15% into the REDmoney Global Shariah Index 2% Series only if they pass a series of market Consumer Goods Services 15% related guidelines related to minimum market Technology capitalization and liquidity as well as country 14% restrictions. Energy 8% Once the index eligible universe is determined Non-Cyclical the underlying constituents are screened Consumer Goods Services 7% Financials using a set of business and ﬁ nancial Shariah 4% guidelines. Industrials Healthcare 22% 11%

The REDmoney Global Shariah Index Series powered by IdealRatings consists of a rich subset of global listed equities that adhere to clearly deﬁ ned and transparent Shariah guidelines deﬁ ned by Shariyah Review Bureau in Jeddah, Saudi Arabia.

The REDmoney Shariah Indexes provides Islamic investors with an accurate and Shariah-specifi c equity performance benchmark with optimized compliance credibility due to the intensive research conducted to ensure that index constituents do not confl ict with the defi ned 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

For further information regarding REDmoney Indexes contact: REDmoney Global Shariah Index Series Andrew Morgan Managing Director, REDmoney Group

RED Email: [email protected] Tel +603 2162 7800

Eurekahedge Asia Paciﬁ c Islamic Fund Index 200

180

160

140

120

100

80 Index Values 60

0 Jul-10 Jul-03 Jan-14 Jan-07 Jun-15 Jun-08 Oct-14 Oct-02 Feb-09 Feb-02 Sep-07 Sep-00 Dec-11 Dec-04 Dec-99 Apr-11 Aug-12 Aug-05 Mar-16 Mar-04 Nov-16 Nov-09 May-13 May-06 May-01

Top 10 Yield-to-Date Returns for ALL Funds Fund Fund Manager Performance Measure Fund Domicile 1 Sanabel HC Securities & Investment 49.63 Egypt 2 Deutsche Noor Precious Metals Securities - Class A DWS Noor Islamic Funds 49.11 Ireland 3 Al Baraka Hermes Fund Management 45.28 Egypt 4 JS Islamic JS Investments 42.53 Pakistan 5 Banque Misr No. 4 HC Securities & Investment 39.25 Egypt 6 Faisal Islamic Bank of Egypt Mutual Hermes Fund Management 37.02 Egypt 7 Atlas Islamic Stock Atlas Asset Management 27.80 Pakistan 8 Atlas Pension Islamic - Equity Sub Atlas Asset Management 26.88 Pakistan 9 Meezan Tahaﬀ uz Pension - Equity Sub Al Meezan Investment Management 25.03 Pakistan 10 Meezan Islamic Al Meezan Investment Management 24.19 Pakistan Eurekahedge Islamic Fund Index 2.76

Based on 86.49% of funds which have reported November 2016 returns as at the 3rd January 2017

Top 10 Sharpe Ratio for ALL Funds Fund Fund Manager Performance Measure Fund Domicile 1 Public Islamic Money Market Public Mutual 20.65 Malaysia 2 PB Islamic Cash Management Public Mutual 17.56 Malaysia 3 PB Islamic Cash Plus Public Mutual 12.41 Malaysia 4 Meezan Tahaﬀ uz Pension - Money Market Sub Al Meezan Investment Management 9.64 Pakistan 5 Meezan Tahaﬀ uz Pension - Debt Sub Al Meezan Investment Management 6.46 Pakistan 6 Al Rajhi Commodity Mudarabah - USD Al Rajhi Bank 6.36 Saudi Arabia 7 Atlas Pension Islamic - Debt Sub Atlas Asset Management 6.36 Pakistan 8 FALCOM SAR Murabaha FALCOM Financial Services 5.92 Saudi Arabia 9 MNC Dana Syariah MNC Asset Management 5.33 Indonesia 10 KAF Dana al-Iddikhar KAF Investment Funds 4.74 Malaysia Eurekahedge Islamic Fund Index 0.11 Based on 86.49% of funds which have reported November 2016 returns as at the 3rd January 2017

Comprehensive data from Eurekahedge will now feature the overall top 10 global and regional funds based on a specifi c duration (yield to date, annualized returns, monthly returns), Sharpe ratio as well as delve into specifi c asset classes in the global arena – equity, fi xed income, money market, commodity, global investing (which would focus on funds investing with global mandate instead of a specifi c 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 fi ve-week rotational basis.

Eurekahedge Islamic Fund Equity Index over the last 5 years Eurekahedge Islamic Fund Equity Index over the last 1 year

160 104 103 140 102 120 101 100 100 99 80 98 97

Percentage 60 Percentage 96 40 95 94 20 93 0 92 Jul-13 Jul-16 Jan-16 Jun-16 Oct-14 Jan-16 Feb-13 Sep-12 Jun-16 Oct-16 Feb-16 Sep-16 Dec-13 Apr-15 Apr-12 Dec-15 Apr-16 Aug-15 Nov-16 Nov-11 Mar-16 Aug-16 Nov-15 Nov-16 May-14 May-16

Top 10 Islamic Fund Equity by 3 Months Returns Fund Fund Manager Performance Measure Fund Domicile 1 Al Baraka Hermes Fund Management 33.80 Egypt 2 Sanabel HC Securities & Investment 31.70 Egypt 3 Banque Misr No. 4 HC Securities & Investment 28.61 Egypt 4 Faisal Islamic Bank of Egypt Mutual Hermes Fund Management 26.61 Egypt 5 JS Islamic JS Investments 16.31 Pakistan 6 Jadwa Saudi Equity Jadwa Investment 11.70 Saudi Arabia 7 Al Rajhi Saudi Equity Al Rajhi Bank 11.21 Saudi Arabia 8 Saudi Companies The Saudi Investment Bank 11.12 Saudi Arabia 9 FALCOM Saudi Equity FALCOM Financial Services 10.84 Saudi Arabia 10 Al Rajhi Petrochemical and Cement Equity Al Rajhi Bank 9.55 Saudi Arabia Eurekahedge Islamic Fund Index 1.32 Based on 85.00% of funds which have reported November 2016 returns as at the 3rd January 2017

Top 10 Islamic Fund Globally-Investing by 3 Months Returns Fund Fund Manager Performance Measure Fund Domicile 1 Al-Ameen Islamic Active Allocation Plan - II UBL Fund Managers 5.07 Pakistan 2 Al-Ameen Islamic Active Allocation Plan - IV UBL Fund Managers 5.05 Pakistan 3 Al-Ameen Islamic Active Allocation Plan - I UBL Fund Managers 5.00 Pakistan 4 Al-Ameen Islamic Active Allocation Plan - III UBL Fund Managers 4.89 Pakistan 5 Al-Ameen Islamic Active Allocation Plan - V UBL Fund Managers 4.67 Pakistan 6 CIMB Islamic Greater China Equity UOB Asset Management 3.98 Malaysia 7 Al Rajhi Commodity Mudarabah - USD Al Rajhi Bank 0.46 Saudi Arabia 8 Watani KD Money Market National Bank of Kuwait 0.13 Cayman Islands 9 Watani USD Money Market National Bank of Kuwait 0.03 Cayman Islands 10 Jadwa Global Sukuk Jadwa Investment -0.25 Saudi Arabia Eurekahedge Islamic Fund Index (1.84) Based on 92.86% of funds which have reported November 2016 returns as at the 3rd January 2017

Contact Eurekahedge To list your fund or update your fund information: [email protected] For further details on Eurekahedge: [email protected] Tel: +65 6212 0900

Disclaimer Copyright Eurekahedge 2016, 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 aﬃ liates provide any express or implied warranty or representations as to originality, accuracy, completeness, timeliness, non-infringement, merchantability and ﬁ tness for any purpose.

Most Recent Global Sukuk Priced Issuer Nationality Instrument Market US$ (mln) Managers 30th Nov 2016 IDB Trust Services Saudi Sukuk Euro market 1,250 Mizuho, Standard Chartered Bank, JPMorgan, Arabia public issue National Bank of Kuwait, National Bank of Abu Dhabi, RHB Capital, Gulf International Bank, Natixis, Credit Agricole 23rd Nov 2016 Etihad Airways UAE Sukuk Euro market 1,500 JPMorgan, HSBC, National Bank of Abu Dhabi, public issue First Gulf Bank, Dubai Islamic Bank, Abu Dhabi Islamic Bank 21st Nov 2016 Bank Muamalat Malaysia Sukuk Domestic market 113 OCBC, DRB-HICOM Malaysia public issue 18th Nov 2016 Maxis Broadband Malaysia Sukuk Domestic market 560 Maybank, CIMB Group, AmInvestment Bank public issue 8th Nov 2016 Barwa Bank Qatar Sukuk Euro market 130 National Bank of Abu Dhabi PJSC private placement 31st Oct 2016 Bank Pembangunan Malaysia Sukuk Domestic market 357 HSBC, CIMB Group Malaysia public issue 25th Oct 2016 Kuveyt Turk Katilim Kuwait Sukuk Foreign market 500 Standard Chartered Bank, Kuwait Finance Bankasi public issue House, Arab Banking, Dubai Islamic Bank, Emirates NBD, QInvest, Noor Bank 24th Oct 2016 Celcom Networks Malaysia Sukuk Domestic market 133 HSBC, CIMB Group public issue 20th Oct 2016 Maxis Broadband Malaysia Sukuk Domestic market 120 AmInvestment Bank public issue 18th Oct 2016 Ahli United Bank Bahrain Sukuk Euro market 200 Credit Suisse, Citigroup, Credit Agricole public issue 12th Oct 2016 TNB Global Ventures Malaysia Sukuk Euro market 750 BNP Paribas, HSBC, CIMB Group, Citigroup Capital public issue 12th Oct 2016 Cagamas Malaysia Sukuk Domestic 139 CIMB Group market private placement 12th Oct 2016 DanaInfra Nasional Malaysia Sukuk Domestic market 1,079 HSBC, RHB Capital, Maybank, CIMB Group, public issue AmInvestment Bank 5th Oct 2016 Islamic Republic of Pakistan Sukuk Euro market 1,000 Standard Chartered Bank, Deutsche Bank, Dubai Pakistan public issue Islamic Bank, Citigroup, Noor Bank 4th Oct 2016 Kingdom of Bahrain Bahrain Sukuk Euro market 2,000 Standard Chartered Bank, JPMorgan, BNP public issue Paribas, Arab Banking, Credit Suisse 26th Sep 2016 Edaran SWM Malaysia Sukuk Domestic market 194 CIMB Group, Hong Leong Financial Group public issue 22nd Sep 2016 UMW Holdings Malaysia Sukuk Domestic market 169 Maybank, CIMB Group public issue 8th Sep 2016 Lembaga Pembiayaan Malaysia Sukuk Domestic market 986 OCBC, RHB Capital, Maybank, Bank Islam Perumahan Sektor public issue Malaysia, CIMB Group, Aﬃ n Investment Bank, Awam AmInvestment Bank 7th Sep 2016 Emaar Sukuk UAE Sukuk Euro market 750 Mashreqbank, Standard Chartered Bank, Arab public issue Banking, National Bank of Abu Dhabi, First Gulf Bank, Dubai Islamic Bank, Union National Bank, Emirates NBD, Noor Bank 1st Sep 2016 SIB Sukuk III UAE Sukuk Euro market 500 Standard Chartered Bank, HSBC, Kuwait Finance public issue House, Arab Banking, Maybank, Dubai Islamic Bank, Emirates NBD, QNB Capital, Noor Bank

Global Sukuk Volume by Month Global Sukuk Volume by Quarter

US$bn US$m US$bn Value (US$bn) Avg Size (US$m) US$m 45 1500 250 600 40 Value (US$bn) 35 Avg Size (US$m) 1250 200 500 30 1000 400 25 150 750 300 20 100 15 500 200 10 50 100 5 250 0 0 0 0 1102 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2016 Subt 2012 2013 2014 2015 2016 Subt

Top 30 Issuers of Global Sukuk 12 Months Issuer Nationality Instrument Market US$ Iss Managers (mln) (%) 1 IDB Trust Services Saudi Sukuk Euro market 2,850 7.0 Standard Chartered Bank, JPMorgan, National Bank of Kuwait, Arabia public issue Gulf International Bank, Natixis, CIMB Group, Emirates NBD, Mizuho, National Bank of Abu Dhabi, RHB Capital, Credit Agricole 2 Perusahaan Penerbit Indonesia Sukuk Euro market 2,500 6.2 Standard Chartered Bank, Deutsche Bank, Dubai Islamic Bank, SBSN Indonesia III public issue CIMB Group, Citigroup 3 DanaInfra Nasional Malaysia Sukuk Domestic market 2,242 5.5 RHB Capital, Maybank, CIMB Group, Hong Leong Financial public issue Group, AmInvestment Bank, HSBC 4 Kingdom of Bahrain Bahrain Sukuk Euro market 2,000 4.9 Standard Chartered Bank, JPMorgan, BNP Paribas, Arab public issue Banking, Credit Suisse 5 Malaysia Sukuk Malaysia Sukuk Euro market 1,500 3.7 JPMorgan, HSBC, Maybank, CIMB Group Global public issue 5 Etihad Airways UAE Sukuk Euro market 1,500 3.7 JPMorgan, HSBC, National Bank of Abu Dhabi, First Gulf Bank, public issue Dubai Islamic Bank, Abu Dhabi Islamic Bank 7 Sarawak Hidro Malaysia Sukuk Domestic market 1,365 3.4 RHB Capital, Maybank public issue 8 DP World UAE Sukuk Euro market 1,200 3.0 JPMorgan, Deutsche Bank, HSBC, National Bank of Abu Dhabi, public issue First Gulf Bank, Barclays, Dubai Islamic Bank, SG Corporate & Investment Banking, Citigroup, Emirates NBD 9 Danga Capital Malaysia Sukuk Domestic market 1,110 2.7 RHB Capital, AmInvestment Bank, Standard Chartered Bank, public issue DBS, CIMB Group 10 EI Sukuk UAE Sukuk Euro market 1,007 2.5 Standard Chartered Bank, HSBC, Arab Banking, Maybank, public issue Dubai Islamic Bank, Emirates NBD, Al Hilal Bank, Noor Bank 11 Islamic Republic of Pakistan Sukuk Euro market 1,000 2.5 Standard Chartered Bank, Deutsche Bank, Dubai Islamic Bank, Pakistan public issue Citigroup, Noor Bank 11 Hazine Mustesarligi Turkey Sukuk Euro market 1,000 2.5 Standard Chartered Bank, HSBC, Emirates NBD Varlik Kiralama public issue Anonim Sirketi 13 Lembaga Malaysia Sukuk Domestic market 986 2.4 OCBC, RHB Capital, Maybank, Bank Islam Malaysia, CIMB Pembiayaan public issue Group, Aﬃ n Investment Bank, AmInvestment Bank Perumahan Sektor Awam 14 Lebuhraya DUKE Malaysia Sukuk Domestic market 912 2.2 RHB Capital, Maybank, CIMB Group, AmInvestment Bank Fasa 3 public issue 15 Maxis Broadband Malaysia Sukuk Domestic market 886 2.2 CIMB Group, AmInvestment Bank, Maybank public issue 16 National Higher Malaysia Sukuk Domestic market 880 2.2 Maybank, CIMB Group, Aﬃ n Investment Bank, AmInvestment Education Fund public issue Bank 17 Kuveyt Turk Kuwait Sukuk Euro market 850 2.1 HSBC, Kuwait Finance House, Dubai Islamic Bank, Abu Dhabi Katilim Bankasi public issue Islamic Bank, Emirates NBD, Kuwait Projects, QInvest, Noor Bank, Standard Chartered Bank, Arab Banking, Dubai Islamic Bank 18 Pengurusan Air SPV Malaysia Sukuk Domestic market 793 2.0 RHB Capital, Maybank public issue 19 TNB Global Malaysia Sukuk Euro market 750 1.9 BNP Paribas, HSBC, CIMB Group, Citigroup Ventures Capital public issue 19 Emaar Sukuk UAE Sukuk Euro market 750 1.9 RHB Capital, Maybank, CIMB Group, AmInvestment Bank public issue 21 Prasarana Malaysia Malaysia Sukuk Domestic market 733 1.8 RHB Capital, Maybank, Kenanga Investment Bank, CIMB Group, public issue AmInvestment Bank 22 Jambatan Kedua Malaysia Sukuk Domestic market 644 1.6 RHB Capital, Maybank, Kenanga Investment Bank, public issue AmInvestment Bank 23 Barwa Bank Qatar Sukuk Euro market 605 1.5 National Bank of Abu Dhabi, Standard Chartered Bank private placement 24 Dubai Islamic Bank UAE Sukuk Euro market 570 1.4 Standard Chartered Bank, HSBC, Arab Banking, National public issue Bank of Abu Dhabi, Dubai Islamic Bank, Sharjah Islamic Bank, Emirates NBD 25 Sime Darby Malaysia Sukuk Domestic market 535 1.3 Maybank public issue 26 Bank Albilad Saudi Sukuk Euro market 533 1.3 HSBC Arabia private placement 27 Sultanate of Oman Oman Sukuk Euro market 500 1.2 Standard Chartered Bank public issue 27 SIB Sukuk III UAE Sukuk Euro market 500 1.2 Standard Chartered Bank, HSBC, Kuwait Finance House, Arab public issue Banking, Maybank, Dubai Islamic Bank, Emirates NBD, QNB Capital, Noor Bank 27 Noor Bank UAE Sukuk Euro market 500 1.2 Standard Chartered Bank, First Gulf Bank, Dubai Islamic Bank, public issue Sharjah Islamic Bank, Citigroup, Emirates NBD, Noor Bank 27 Emirate of Sharjah UAE Sukuk Euro market 500 1.2 Bank of Sharjah, HSBC, Barclays, Dubai Islamic Bank, Sharjah public issue Islamic Bank, Commerzbank Group Total 32,202 80

Top Managers of Sukuk 12 Months Sukuk Volume by Currency US$ (billion) 12 Months

Manager US$ (mln) Iss % US dollar 23.8 1 CIMB Group 5,374 37 13.3 Malaysian ringgit 15.4 2 Maybank 4,428 31 11.0 Saudi riyal 0.5 3 Standard Chartered Bank 4,210 23 10.4 4 RHB Capital 3,279 32 8.1 Indonesian rupiah 0.3 5 HSBC 2,979 19 7.4 6 AmInvestment Bank 2,544 20 6.3 Sukuk Volume by Issuer Nation US$ (billion) 12 Months

7 Dubai Islamic Bank 1,829 16 4.5 Malaysia 19.0 8 JPMorgan 1,598 7 4.0 UAE 6.8 Saudi Arabia 4.3 9 Emirates NBD 1,456 14 3.6 Indonesia 2.7 10 National Bank of Abu Dhabi 1,394 9 3.5 Bahrain 2.2 11 Citigroup 1,146 6 2.8 Qatar 1.5 12 Deutsche Bank 987 4 2.5 Kuwait 1.2 13 Arab Banking Corporation 854 8 2.1 14 Noor Bank 634 8 1.6 Global Sukuk Volume by Sector 12 Months 15 BNP Paribas 588 2 1.5 11% 16 First Gulf Bank 550 5 1.4 4% Finance Government 17 Credit Suisse 467 2 1.2 9% 43% Transportation 18 National Bank of Kuwait 450 4 1.1 Utility & Energy 10% 19 Kenanga Investment Bank 406 7 1.0 Telecommunications Other 20 Abu Dhabi Islamic Bank 393 3 1.0 23% 21 Aﬃ n Investment Bank 391 4 1.0 22 Hong Leong Financial Group 367 4 0.9 Global Sukuk Volume - US$ Analysis 23 Natixis 353 2 0.9

23 Gulf International Bank 353 2 0.9 US$bn 250 25 OCBC 281 7 0.7 Non-US$ US$ 200 26 DBS 253 3 0.6 150 27 Sharjah Islamic Bank 226 3 0.6 100 28 Credit Agricole 223 3 0.6 50 29 Kuwait Finance House 206 4 0.5 0 30 Barclays 203 2 0.5 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2012 2013 2014 2015 2016 Subt Total 40,311 133 100

Top Islamic Finance Related Project Finance Mandated Lead Top Islamic Finance Related Project Financing Legal Advisors Arrangers 12 Months Ranking 12 Months Mandated Lead Arranger US$ (million) No % Legal Advisor US$ (million) No % 1 Kuwait Finance House 1,996.95 1 17.32 1 Latham & Watkins 4,279.40 3 32.24 2 National Bank of Kuwait 1,996.95 1 17.32 3 Al Rajhi Capital 663.09 2 5.75 2 Allen & Overy 3,197.46 3 24.09 4 Alinma Bank 549.59 2 4.76 4 Banque Saudi Fransi 497.22 3 4.31 3 Cliﬀ ord Chance 2,755.10 2 20.76 4 HSBC 497.22 3 4.31 4 Baker & McKenzie 1,365.38 1 10.28 7 Samba Capital & Investment 497.22 3 4.31 Management 8 National Commercial Bank 490.69 3 4.25 5 Norton Rose Fulbright 915.00 1 6.89 9 Mitsubishi UFJ Financial Group 377.18 3 3.27 5 White & Case 758.14 1 5.71 10 Standard Chartered Bank 328.92 3 2.85

Top Islamic Finance Related Financing Mandated Lead Arrangers Ranking 12 Months Top Islamic Finance Related Financing Deal List 12 Months Mandated Lead Arranger US$ (mln) No % Credit Date Borrower Nationality US$ (mln) 1 Samba Capital 969 5 7.0 15th Apr 2016 Yanbu Aramco Sinopec Saudi Arabia 4,700 2 Banque Saudi Fransi 939 4 6.8 Reﬁ ning

th 3 Saudi National Commercial Bank 933 4 6.7 27 Jun 2016 Rabigh Electricity Saudi Arabia 2,686 20th Sep 2016 Aluminium Bahrain Bahrain 1,500 4 Abu Dhabi Islamic Bank 739 6 5.3 19th Sep 2016 Saudi Electricity Saudi Arabia 1,333 5 Dubai Islamic Bank 684 9 4.9 9th Mar 2016 Dhuruma Electricity Saudi Arabia 1,138 6 China Development Bank 621 1 4.5 15th Jun 2016 PNB Jersey Malaysia 889 7 Emirates NBD 615 7 4.4 21st Dec 2015 Engro Powergen Pakistan 851 8 SABB 559 5 4.0 29th Aug 2016 Atlantis The Palm UAE 850 9 Noor Bank 545 8 3.9 31st Aug 2016 Almarai Saudi Arabia 600 10 Mashreqbank 489 5 3.5 1st Mar 2016 National Oil & Gas Authority Bahrain 570 11 Al Rajhi Capital 366 2 2.6 Top Islamic Finance Related Financing by Country 12 Months 12 Standard Chartered Bank 363 6 2.6 Nationality US$ (mln) No % 13 Union National Bank 345 4 2.5 1 Saudi Arabia 5,406 6 39.0 14 Abu Dhabi Commercial Bank 313 4 2.3 2 UAE 3,475 15 25.1 3 Pakistan 1,548 3 11.2 15 AKFED 292 2 2.1 4 Bahrain 1,188 2 8.6 16 Alinma Bank 260 2 1.9 5 Jordan 550 2 4.0 17 Riyad Bank 258 2 1.9 6 Qatar 460 1 3.3

18 Arab Banking 251 4 1.8 7 India 368 1 2.7 8 Egypt 305 2 2.2 24 Natixis 175 3 1.3 9 Malaysia 283 1 2.0 25 BBK 174 3 1.3 10 Turkey 204 2 1.5 26 National Bank of Bahrain 159 2 1.1 Top Islamic Finance Related Financing by Sector 12 Months 26 Ahli United Bank 159 2 1.1 Utility & Energy 28 National Bank of Abu Dhabi 148 3 1.1 Oil & Gas 29 Mitsubishi UFJ Financial Group 138 1 1.0 Real Estate/Property 29 Arab National Bank 138 1 1.0 Finance

Top Islamic Finance Related Financing Mandated Lead Arrangers Dining & Lodging 12 Months US$ bln0 128 3 4 5 6 7 Bookrunner US$ (mln) No % 1 Abu Dhabi Islamic Bank 1,006 6 13.2 Global Islamic Financing - Years to Maturity (YTD Comparison) 2 Noor Bank 746 7 9.8 3 Dubai Islamic Bank 642 5 8.4 2015 2014 4 Standard Chartered Bank 570 5 7.5 2013 5 Emirates NBD 474 3 6.2 2012 6 Mashreqbank 428 2 5.6 2011 2010 7 SABB 312 2 4.1 2009 8 Abu Dhabi Commercial Bank 283 1 3.7 2008 9 Arab Banking Corporation 275 4 3.6 0% 20% 40% 60% 80% 100% 0-3yrs 3-5yrs 5-7yrs 7-10yrs 10+yrs 10 Saudi National Commercial Bank 267 1 3.5

Are your deals listed here? If you feel that the information within these tables is inaccurate, you may contact the following directly: Mayumi Ohira (Media Relations) Email: [email protected] Tel: +852 2804 1223

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9th IFN Jordan Dialogue Amman, Jordan OCTOBER 2017

14th CIS Forum Astana, Kazakhstan TBC Africa Islamic Finance Forum TBC

Washington DC, the 22nd China OIC Forum Be ĳ ing, China 16th Sovereign Sukuk Dialogue US

th 28 IFN Morocco Forum Casablanca, Morocco 18th IFN US Forum New York, the US

APRIL 2017 TBC IFN Pakistan Forum Lahore, Pakistan

Kuala Lumpur, 10th – 11th IFN Asia Forum NOVEMBER 2017 Malaysia

th Kuala Lumpur, 19 IFN Kuwait Forum Kuwait City, Kuwait 12th IFN FinTech Forum Malaysia 22nd IFN Saudi Arabia Forum Jeddah, Saudi Arabia MAY 2017

16th IFN UK Forum London, the UK

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