INDICATIVE MAJOR CURRENCIES
Thursday, November 27, 2014
- US Treasuries continued to show strength. On Wednesday, UST yields fell further, supported by weak economic data, and as Euro Zone govvies yields also remained low.
- Malaysian government bond market saw improved buying flows after IMF commented that the fuel subsidy removal may strengthen Malaysia’s fiscal position, and send the deficit lower than 3.00% of GDP in next year. The 10-year MGS garnered good demand, and closed 2bps lower at 3.85%.
- Thai sovereign yield curve ended marginally flatter, backed by stronger-than-expected exports number released on mid-week. Trade surplus reached $32 million for the month of October, thanks to the 3.97% expansion in exports, alongside the 4.88% dip in exports.
- IDR government bond market was rallying yesterday on the back of foreign buying flows. Think it was more on fuel policy sentiments. We are seeing few local names are taking profit but mostly because of yearly target. Total volume improved to IDR 11.25 trillion on Wednesday from IDR 9.48 trillion on Tuesday. Investors’ favorites were still benchmark bonds and retail bonds ORI011.
- Along the Asian credits, Chinese names dealt mixed, as some investors realized profit ahead of Thanksgiving Day. Longfor Jan’23 dipped from 98.21pts to 98.08pts, while China Overseas May’24 edged higher from 109.32pts to 109.40pts.
Wednesday, November 26, 2014
26th November 2014 (Volume 11 Issue 47)
A risky business
Welcome to the last issue of November, and as the year draws ever closer to its end, IFN continues to bring you the latest news and most innovative features from the industry around the world. This week, our cover story explores one of the most interesting concepts to hit the market: the complex and challenging issue of Shariah compliant Coco bonds, which could provide an intriguing new avenue for liquidity management – but whose high risk profile could also represent a dangerous temptation for unsophisticated investors.
Our IFN reports continue with the theme of risk and reward, exploring at the slow but sure trajectory of Islamic repos; along with a look at a new look at an old favorite in the funds industry, the latest player in Pakistan’s Takaful sector, Indonesia’s latest gambit in its Islamic finance strategy, our weekly round-up of sovereign Sukuk, and much more. Our case study covers the US$6 billion IPO from National Commercial Bank, while our inhouse analyses explore the importance of technology and trace the latest developments in South Africa.
Our IFN correspondents this week come to you from Nigeria, Turkey, Malta, Pakistan and Azerbaijan; while we also bring you special reports on Sukuk from Farmida Bi of Norton Rose and Shariah compliant contracts from Hussein Kureshi of OCBC. Our country focus this week is Japan with features from Etsuaki Yoshida of JBIC and Tareq Rahman; while Barry Cosgrave of Shearman & Sterling and Abdulbasit Ahmed Al-Shaibei of QIIB discuss current issues in liquidity management.
As the markets stir themselves up into a final flurry before the end of the year, we wish all our readers a productive passage into the last month of 2014.
Coco bonds: Chance or challenge?
Sales of contingent convertible (Coco) bonds, a high-risk debt/equity hybrid offering an attractive option for banks to boost Tier 1 capital, have tripled in the conventional market this year as issuers leverage the low interest rate environment to chase higher-yielding debt. LAUREN MCAUGHTRY explores whether these complex new instruments could present a new alternative for the Islamic debt markets, as banks seek new avenues to boost Basel III capital.
IFN Country Correspondents
IFN Country Analysis
IFN Sector Analysis
An Islamic bank has been using an Istisnah and parallel Istisnah structure to finance the construction of residential as well as commercial buildings
Biggest IPO in the Arab world: National Commercial Bank
Making headlines earlier this month, Saudi Arabia’s National Commercial Bank (NCB), the kingdom’s largest financial institution successfully floated its US$6 billion initial public offering (IPO) on the Tadawul. Speaking to Harj Rai and Andrew Tarbuck, partners at Latham & Watkins and legal advisors for the IPO, NABILAH ANNUAR takes a closer look at this historical deal
Sukuk milestones continue
After the flurry of activity over the past few months that saw debut sovereign issuances from the UK, Hong Kong, South Africa and Luxembourg as well as a debut Sukuk from Goldman Sachs, the market has continued to produce landmark results worldwide. FARMIDA BI reviews the sector.
In the latest of our series exploring specific Shariah compliant contracts and structures, HUSSEIN KURESHI and MOHSIN HAYAT give us their opinion on the concept of three-party sale concepts. After having read ‘Heaven’s Banker’s’ by Harris Irfan, the concept of ‘contractum trinius’ ran shivers down my spine.
The second wave of Islamic finance in Japan
Japan has been slow to recognize or encourage the development of a domestic Islamic finance industry, with Japanese banks required to enter the sector through subsidiaries based in international markets.
Outlook on Japan and Islamic finance
With Japan hosting the Olympic Games in 2020, the country is taking new measures to make it a more foreigner-friendly nation since it will be hosting the Olympics Games in 2020 which will attract tourists into the nation. TAREQ RAHMAN asks what this implies for Islamic finance? The games presents busines opportunities for Japan to cater to the very much untapped Muslim market.
Liquidity management in Islamic finance: Opportunities and challenges
As global growth returns and with the Sukuk market re-establishing itself, focus has returned to the problem presented by the dearth of liquidity management tools available to Islamic investors. BARRY COSGRAVE discusses.
Liquidity and secondary markets
One of the most commonly used secondary market options for liquidity purposes are treasury bills, which central banks globally use for draining liquidity while financial institutions participating in the global markets also use them as part of their liquidity management strategy.