Vol. 6, Issue 50 18th December 2009 The World’s Global Islamic Finance News Provider ALERT Register now - It’s free S It’s All About the Niyyah In this issue As we close out 2009, the following question it should be) with respect to practice in Islamic IFN Rapid ..................................................... 2 comes to mind: Which intention (Niyyah) is the fi nance. The time is now to reconsider the Islamic Finance News ................................ 3 Islamic fi nance industry trying to capture — the intent behind each transaction, as opposed to Prophet’s or profi ts’? targeting profi table projects then structuring Rating News .............................................12 them in a manner that is deemed Shariah A well-known hadith iterates that every action is compliant. IFN Report: judged by its intentions. Ideally, Islamic fi nance Abu Dhabi to the Rescue ......................15 is supposed to capture the very essence of this Far too often, practitioners miss the forest for Articles: Muslim tradition. Transactions should refl ect the trees — there is a tendency to focus on The Year That Was (Final Part) ............16 well-intentioned Islamic principles, not just in format as opposed to substance. Ultimately, a ‘structuring’ but in purpose as well. Sukuk can be structured in an airtight Shariah- After Dubai’s Desert Storm ..................18 based manner. But if its intent is not sound, Up until recently, many investors focused on then what is the point of an Islamic fi nancial Investment Funds – Who’s Really Looking Out for the Investor?...............20 the real estate sector, but Dubai’s economic structure? turmoil is forcing practitioners to reconsider Exposure Draft: Standard on Solvency their investment strategies. Why raise funds and structure an investment Requirements for Takaful vehicle islamically to build yet another man- Undertakings ..........................................23 Good. made island? Even Shariah compliance cannot cloak conspicuous consumption. Intention is a Roundtable: Shariah compliant products: Where do we go from here? ...................26 The world — Islamic or otherwise — is not short crucial element in Islam, but it seems to have of worthy projects that need funding. Granted, been placed on the back burner in Islamic Meet the Head ..........................................28 some ventures may not offer the appeal that a fi nance. Safdar Alam, Head of Islamic Structuring of tall skyscraper. JP Morgan Shariah-based structuring is important. And Yet, across the Muslim globe, capital is needed earning money is a God-given right. But, as the Termsheet ..................................................29 Cagamas’ US$142 million Islamic Medium Term to further develop budding communities. hadith iterates: Ultimately, every (trans)action Notes Monies are needed in Yemen for water sector is judged by its intention. support (a project currently funded by the Moves .........................................................30 World Bank and a grant from Abu Dhabi). Or Hopefully, 2010 will witness a shift in funds can be invested in Palestine to promote Islamic investment practices, a move that Deal Tracker ..............................................31 market competition in telecommunication (a will bring the industry back to basics by Islamic Funds Tables ................................32 joint venture is in the works funded by Qatar’s providing much needed investment support to Qtel and the Palestine Investment Fund). Even developing Muslim societies through (Islamic) S&P Shariah Indexes ...............................33 further, consider the capital raised for a railway infrastructure project fi nancing. initiative in Indonesia (a deal recently pushed Dow Jones Shariah Indexes ....................34 through regulation, spearheaded by the UAE’s This is our fi nal 2009 publication, so from our Islamic League Tables .............................35 Ras al Khaimah and the Trimex Group). family to yours, happy holidays! Thomson Reuters League Tables ...........38 Although these joint initiatives may not be structured Islamically, per say, they do —- From 2010, Islamic Finance news Events Diary...............................................41 without a doubt — exude the spirit of Islam will be published on Wednesdays. Country Index ............................................42 because, ultimately, they support fellow Hence, our fi rst issue will be on brethren, promote fair practice and distribute th Company Index .........................................42 capital (not to mention risk). the 6 January. As the year closes, let us raise the bar (to where Subscription Form ....................................42 A round-up of all this week’s news IFN RAPID www.islamicfi nancenews.com • Mouchel Group to shut down Dubai NEWS operations, Abu Dhabi chosen as new base RATINGS • Thailand seeks World Bank support for • Standard & Poor rates GE Capital Sukuk sovereign Sukuk issuance • Emirates Investment Services: Sukuk fund as ‘AA+’ closes with high returns • World Bank to support standardization in • RAM removes PINS Capital from Rating Islamic fi nance sector Watch • Dubai’s Department of Finance admits to a • GE Capital targets Middle Eastern lack of transparency • RAM reaffi rms Maybank’s fi nancial investors through NASDAQ listing of Sukuk institution ratings at ‘AAA’ and ‘P1’ • Dubai Islamic Bank launches new wealth • Pakistan urged to do more to improve management service • Fitch affi rms Alliance Bank’s individual Islamic banking sector rating at ‘C/D’ • Funding costs for Islamic banks rise due to • Thailand to benefi t from Malaysia’s Dubai World’s debt restructuring • RAM Ratings reaffi rms Bank Rakyat’s expertise in Islamic banking fi nancial institution ratings at ‘AA3/P1’ • Pakistan braces for impact from Dubai • Dubai World to continue working with • MARC upgrades Instacom SPV’s notes to World creditors after US$10 billion bailout ‘AAID’ • State Bank of Pakistan conducts Islamic • A comprehensive legal framework for • MARC affi rms Tesco’s US$1 billion debt banking awareness program Dubai World program rating • State Bank of Pakistan to launch Islamic • Bank of Kuwait and the Middle East to • RAM reaffi rms RHB Capital’s issue ratings banking in microfi nance sector become Kuwait’s fi fth Islamic bank • Petronas rating slips to negative due to • Brunei’s ministry of fi nance succeeds in risky investment in Iraq Dubai to repay US$10 billion it received pricing double Sukuk • from Abu Dhabi to settle Dubai World’s • Capital Intelligence has affi rmed the debts • Dubai yet to settle US$7.5 billion debt, foreign currency ratings of AmBank Group says report • DLA Piper Middle East advises creditors to • Moody’s downgrades National Bank of negotiate rather than sue • Indonesian fi nance ministry to raise a Bahrain and Bank of Bahrain and Kuwait US$18.5 billion of debt in 2010 • Al Jazeera to introduce more Islamic • Fitch affi rms Industrial Bank of Kuwait’s products • First Shariah compliant REIT marks issuer default rating milestone for Singapore • UAE Central Bank orders banks to reveal • Bahrain Islamic Bank gets ‘BAA1/P-2/D+’ investment details for bonds • Oilcorp unit fails to redeem US$7.04 ratings million Shariah notes • Tough road ahead for Dubai • Moody’s downgrades Emirates NBD, • Bank Islam Malaysia plans to explore the Mashreqbank and Dubai Islamic Bank Abu Dhabi Islamic Bank inks US$50 prospect of developing wakaf land into • million fi nancing with International Capital property projects • Five Dubai-based banks on rating watch Trading list for further assessment • Indonesia will clear red tape to woo foreign Newly launched HSBC Amanah Premier investments • targets the rich MOVES • Kerala state government to issue Sukuk in • Credit Suisse picks Urs Rohner as new Kuwait is prepared to aid Dubai in debt 2010 • chairman crisis • LCL Corporation falls victim to Dubai • National Bank of Pakistan appoints Irtiza ICD plans to set-up an investment fi nancial crisis • Kazmi as head of corporate banking company in Tatarstan • Penerbangan Malaysia completes second • Gulf Finance House promotes Ted Pretty as issuance of US$73.7 million TAKAFUL group deputy CEO • The technical committee of the IFSB • Vince Cook resigns from Islamic Bank of • Petrochemical industry in the Gulf told to introduces exposure draft for Takaful fund projects via Sukuk Asia • Takaful International Company inks deal • Faisal Private Bank could face foreclosure with Hannover Retakaful for family Takaful on parts of its real estate portfolio insurance © Page 2 18th December 2009 NEWS www.islamicfi nancenews.com AMERICAS Support sought for Sukuk issuance US: Thailand has asked the World Bank for assistance in issuing a sovereign Sukuk to boost its emerging Islamic fi nance sector, but it has yet to disclose further particulars of its intention. The World Bank vice president for East Asia and Pacifi c, James Adam, noting that Thailand had not been borrowing from the bank for a long while, advised the country’s government not to rush things, that it is better to start with small steps. Indonesia in April issued its fi rst global sovereign Sukuk, raising US$650 million, and plans to issue its next Sukuk to domestic retail investors in April 2010. “Clearly governments in Southeast Asia have some interest in tapping into Islamic fi nance,” Adam said. The World Bank’s fi nancial unit, International Finance Corporation, issued a US$100 million Sukuk Al Hilal in October, making it the fi rst non-Islamic fi nancial institution to do so in the Gulf Cooperation