GLOBAL: Malaysia-based
rating agency RAM Rating Services has announced the signing of a mutual
collaboration agreement with Japan-based credit rating agency, Rating and
Investment Information (R&I). R&I is Japan’s largest credit
rating agency, calling on almost 40 years in bond market and credit
experience.
The agreement, which is the first to be signed between R&I and a
credit rating agency from the ASEAN region, has been hailed as a
significant milestone by Dr K Govindan, the group CEO of RAM, for both
the agency and its developing focus on Islamic finance in particular.
“A[nother] primary focus of the collaboration is also to support the
development and understanding of Islamic finance, in support of
Malaysia’s aim to expand her appeal to be the global Islamic finance
hub,” affirmed Dr K Govindan.
This year has been significant in terms of Islamic finance milestones for
Japanese financial institutions, with Bank of Tokyo-Mitsubishi UFJ
Malaysia (BTMU Malaysia) becoming both the first Japanese bank to issue
Sukuk and the first in the world to issue yen-denominated Sukuk, in
September. The two-tranche issuance, made under the bank’s US$500 million
multi-currency Sukuk Wakalah Al-Istithmar program was rated
‘AAA(bg)/Stable’ by RAM.
Despite amendments to tax legislation in 2011 to create an even playing
field for Islamic paper in Japan, there has yet to be an issuance of
Sukuk in the domestic market. Speaking exclusively to IFN, Siew Suet
Ming, a senior general manager and head of structured finance ratings at
RAM, outlined the current situation regarding Islamic finance: "With
Abenomics taking shape, there is a lot of liquidity in the Japanese
market looking for higher yield investments outside of Japan. Sukuk
market's tremendous growth and some of the recent sovereign Sukuk from
non-Muslim nations are making many of them sit up and realize that it's a
market that they perhaps can't afford to miss.”
The groundwork laid by Japanese banks in the Islamic finance sectors of
the ASEAN markets will not go to waste however, as Siew notes: "At
the same time, Japan is a big investor in the Asian region which is home
to some of the most populous Muslim nations in the world. It would make
sense if they are able to originate Shariah compliant instruments to be
able to take advantage of the opportunities available.”
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