GLOBAL:
Over the past 16 months, since the implementation of Basel III in January
2013, a total of eight Basel III-compliant Sukuk issuances have been
made. Auctioned by seven different issuing banks across Malaysia, Saudi
Arabia and the UAE, the deals raised approximately US$4.93 billion.
According to KFH Research, the gradual implementation of Basel III
accords has led Islamic banks to turn towards Basel III-compliant Sukuk
instruments to satisfy the revised capital standards. The research arm of
Kuwait Finance House expects more Islamic banks to come to the market
with Basel III-compliant issuances.
The first Sukuk instrument structured to comply with Basel III standards
were issued by Abu Dhabi Islamic Bank (ADIB) in November 2012. The US$1
billion Sukuk was compliant to Basel III’s additional Tier 1 capital
requirements and generated an overwhelming response from the investors.
The deal was more than three times oversubscribed on the initial
benchmark size at an orderbook of US$15.5 billion, with an expected
profit rate of 6.37% – the lowest ever coupon for an instrument of this
type.
ADIB’s Sukuk success spurred others to follow suit. Financial
institutions which have issued Basel III-compliant Sukuk include: Dubai
Islamic Bank, Saudi Hollandi Bank, Saudi British Bank, National
Commercial Bank, AmIslamic Bank, Maybank Islamic and most recently, RHB
Islamic. Additionally, Public Islamic Bank has also jumped onto the bandwagon
announcing its upcoming Basel III-compliant Tier 2 Sukuk issuances this
year.
Based on KFH Research’s findings, out of the US$4.93 billion outstanding
Basel III Sukuk, 59% was issued in accordance to Basel III's Tier 2
capital requirements, while the other 41% was raised complying with the
additional Tier 1 capital requirements. Various structures were utilized
by issuers, the most preferred being the Mudarabah structure (67%),
followed by hybrid structures (22%) and the Murabahah structure (11%).
Sukuk currently play an instrumental role in addressing the liquidity and
capital adequacy needs of Islamic banks as stipulated by the Basel III
accords. Basel III-compliant Sukuk issuances is believed to be a
significant milestone in the development of Shariah compliant financial
engineering which will fuel the momentum of the global Sukuk market.
|
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.