Friday, September 19, 2014

Goldman Sachs debuts Sukuk – could this be its comeback to the Middle East and Islamic finance?


Islamic Finance news Alert

Thursday, 18th September 2014

S&P 500 Shariah
Dow Jones Islamic World
MSCI World Islamic
FTSE Shariah All World
Russell - IdealRatings Islamic Global
1,766.09
2,905.21
1,203.57
2,104.06
1,868.23
1.68 (0.10%)
-0.63 (-0.02%)
(0.16%)
-0.90 (-0.04%)
11.67 (0.63%)


Daily Cover


US: After foregoing its Sukuk plans three years ago, Goldman Sachs has finally issued its much talked-about Islamic debt, the first for the US investment bank, and any conventional US bank for that matter. Priced at 90bps over midswaps (tighter than the initial guidance of 95bps), the US$500 million program was three times oversubscribed attracting some US$1.5 billion in orders.

Carrying a profit rate of 2.84%, the five-year Sukuk program has notable differences from the bank’s previously planned facility – suggesting that Goldman Sachs has taken from its previous failure valuable lessons to ensure the success of its new program. Most noteworthy is the change in structure from the controversial Murabahah to the more acceptable Wakalah. The program structure dictates 51% of the issued amount to be assumed by the bank’s subsidiary J Aron & Co based on a Wakalah contract while the remaining 49% will be based on Murabahah with SPV Jany Sukuk.

Goldman Sachs also chose to list the issue on the Luxembourg Stock Exchange over the Irish Stock Exchange – a move which is likely motivated by Luxembourg’s greater commitment and involvement in Islamic finance which enhance its appeal to Shariah-inclined investors. Apart from itself, the bank’s team of arrangers for the transaction comprised of familiar names in the industry including: Abu Dhabi Islamic Bank, Shariah compliant QInvest, Saudi Arabia’s NCB Capital, Emirates NBD and National Bank of Abu Dhabi.

The Sukuk is indeed welcomed by the industry as a testament to the growing internationalization of Shariah compliant financial instruments as related to IFN by Joshua Brockwell, the investment communications director of US-based Azzad Asset Management: “The Goldman Sukuk illustrates the growth of Islamic finance beyond the traditional markets of the Middle East and Southeast Asia.” However, a bigger question looms: With the US bank flush with liquidity and in no need for more capital, could Goldman Sachs’ return to the Islamic debt market indicate a return to the Middle East or a new strategy focusing on Islamic finance? The bank did not return IFN’s request for comments.

Regardless of the bank’s intention, its entry into the Sukuk market further cements the position of the Islamic finance industry in the global stage as demonstrated by strong interest from various international markets including Sukuk debutants Hong Kong, the UK, Sharjah and prospective issuers such as South Africa and Luxembourg.



Sri Lanka: An IFN Correspondent Report


New players, new development
The Islamic banking and finance industry in Sri Lanka has been showing considerable positive movements and is now getting shaped from all corners. Many old faces in the Sri Lankan banking and finance industry are moving into this rapidly growing market. However, the growth momentum is not truly reflected in the rate new Shariah compliant financial products are being developed.
Company Spotlight


Club Ethis Investment Network
One of the most rewarding aspects of a rapidly evolving nascent industry is the exciting promises that invention and innovation bring as the industry grows and takes form – the Islamic finance sector is no different. For IFN’s company focus this week, VINEETA TAN shines the spotlight on Club Ethis Investment Network, a newcomer to the Shariah compliant financial fraternity, who has brought with it an interesting and unique proposition.
Today's IFN Alerts


SOUTH AFRICA: South African government launches maiden US$500 million Sukuk at a yield of 3.9%, receives US$2.2 billion in orderbook

GLOBAL: IDB to price benchmark Sukuk today

PAKISTAN: Delays in sovereign Sukuk and other deals caused by political uncertainty cost Pakistan US$2.4 billion in foreign exchange reserves

TURKEY: Ongoing Bank Asya debacle adversely affects its Sukuk performance

MALDIVES: Maldives Monetary Authority governor highlights Islamic finance as an area of opportunity for the country

MALAYSIA: Sultan of Perak agrees to become Malaysia International Islamic Financial Center's royal patron

BRUNEI: Local Islamic banks in Brunei should focus on retail banking, says expert

UAE: Emirates Islamic introduces five-year Wakalah investment option

RUSSIA: AK BARS Bank's accounts prove Islamic financing is cheaper than eurobonds

UAE: ADIB signs MoU with Abu Dhabi University for sponsorship and academic programs

UAE: ADIB inaugurates new Business Banking Sales Center in Sharjah

OMAN: Bank Nizwa opens second branch in the Al Sharqiyah Governorate

BAHRAIN: Islamic International Rating Agency reaffirms ABC Islamic's international and national scale ratings














REDmoney events


IFN Kuwait Forum 2014
29th September 2014 (Kuwait City)

IFN Sri Lanka Forum 2014
21st October 2014 (Colombo)

IFN Turkey Forum 2014
6th November 2014 (Istanbul)

IFN Saudi Arabia Forum 2014
17th November 2014 (Riyadh)

IFN Africa & Egypt Forum 2014
8th December 2014 (Cairo)

IFN Indonesia Forum 2015
22nd April 2015 (Jakarta)

IFN Asia Forum 2015
25th-26th May 2015 (Kuala Lumpur)

IFN Europe Forum 2015
9th-10th June 2015 (Luxembourg)

IFN Global Forum 2015
13th-14th September 2015 (Dubai)

REDmoney training

Islamic Treasury & Risk Management Products
22nd - 24th September 2014 (Kuala Lumpur)

Understanding Shariah Parameters on Murabahah
24th September 2014 (Kuala Lumpur)

Islamic Fund & Asset Management
25th - 26th September 2014 (Kuala Lumpur)

Basel III for Financial Institutions
13th - 15th October 2014 (Kuala Lumpur)

Shariah Audit for Islamic Business Banking
13th - 15th October 2014 (Kuala Lumpur)

Structuring Islamic Legal Documentation
14th - 15th October 2014 (Kuala Lumpur)

Shariah Governance, Corporate Governance and IFSA 2013
15th - 16th October 2014 (Kuala Lumpur)

Funds Transfer Pricing
19th - 21st October 2014 (Manama)

Stress-testing for Banks and Financial Institutions
28th - 29th October 2014 (Kuala Lumpur)

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Related Posts with Thumbnails