Tuesday, June 30, 2015

FAA Newsletter June 2015

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The Truth About Talent
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Understanding Adult Learners
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RAM Ratings reaffirms Aquasar Capital's AAA(s) rating, anchored on Sarawak State Government's credit strength

Published on 30 June 2015
RAM Ratings has reaffirmed the AAA(s)/stable rating of Aquasar Capital Sdn Bhd’s (Aquasar Capital) RM1,500 million Sukuk Murabahah (2014/2029). Aquasar Capital is a special-purpose vehicle that is indirectly held by the Sarawak State Financial Secretary via wholly owned Aquasar Holdings Sdn Bhd. Its sole purpose is to issue the Sukuk Murabahah for the development of the Kuching Centralised Sewerage System. The operation and maintenance of the sewerage project has no bearing on Aquasar Capital’s repayment of the Sukuk. RAM equates Aquasar Capital’s issue rating with Sarawak’s credit strength as the payments of the Sukuk each year are borne by the State, although there is no explicit guarantee from the State Government.
The rating is anchored by Sarawak’s fiscal strength, its abundant resources which form the backbone of the economy and the State’s finances, as well as its supportive relationship with the Federal Government. These strengths negate the hefty debt levels assumed by the State Government, economic and financial concentration in the resource sector and the lag in the overall development of the State.
Sarawak’s financials compare favourably to that of other Malaysian states. The State’s cash and investment position stood at over RM23 billion as at end-2013, providing a sufficient buffer against unforeseen deficits and high adjusted-debt levels. Sarawak has ample fiscal reserves from the accumulation of past budget surpluses, attributable to the State’s solid revenue-generating ability. The State is rich in resources – crude oil and gas, timber and crude palm oil – which underpin its robust financial profile, with more than 50% of its revenue derived from oil and gas-related industries. The primary sector is also a major contributor to the State’s economic output. While Sarawak’s economy has benefited greatly from this sector, its significant dependence on resource-related industries exposes it to economic and financial volatility. The State projects its fiscal surplus to narrow this year (expected 2015: RM366 million; unaudited 2014: RM3,050 million) owing to lower oil prices (RAM’s average 2015 oil price forecast: USD60 per barrel). In any case, Sarawak’s ample liquid assets, which stood at over 4.5 times its annual expenditure and 2.5 times its total adjusted debt, sufficiently cushion the State against any unexpected deficit.

Media contact
Serene Tan
(603) 7628 1088

MALAYSIA: CCM Duopharma Biotech secures RM245.12 million (US$64.58 million) commodity Murabahah term financing from RHB Islamic

Islamic Finance news Alert

Tuesday, 30th June 2015

S&P 500 Shariah
Dow Jones Islamic World
FTSE Shariah All World
Russell - IdealRatings Islamic Global

-40.77 (-1.96%)

HIGHLIGHTS: Market share of Indonesian government Islamic securities reaches three-year high – CIBAFI admits new members – Iran to raise stake in ITFC

Daily Cover

KAZAKHSTAN: The Islamic microfinance and SME financing segment of Kazakhstan is anticipated to receive a boost as local player New Finance plans to support the industry with new Shariah compliant products.

The Islamic microfinance company has engaged Bahrain-based Shariyah Review Bureau (SRB) to advise and certify the firm’s Islamic product suite, as it looks forward to rolling out Ijarah, Murabahah and Musharakah solutions. “In the near future, we expect to be generating richer experiences with our Shariah compliant offerings and more opportunities for engagement and participation in our Islamic products,” shared Timur Alim, the founder and CEO of New Finance, in a statement.

Since the introduction of Islamic banking and finance in the country six years ago, there has been a steady rise in demand for Shariah compliant financial products from the Muslim-majority nation. This growing interest which is simultaneously encouraging and being fuelled by the government’s proactive Islamic finance stance has materialized into a string of concrete steps to position Almaty as the Islamic finance center for the CIS and Central Asian region.

However, despite the positive developments including the 2015 Islamic Finance Amendments which came into effect last month and a host of regional expansion efforts (See IFN Report Vol 12 Issue 20: ‘Kazakhstan means serious business — looking outwards for expansion’), there is still much to be done to spur activities in the microfinance area.

The IDB is a major force in driving the Islamic microfinance proposition in Kazakhstan, initiating a tripartite MoU in 2009 with the Fund for Financial Support of Agriculture and KazAgro to develop Shariah microcredit. This led to the disbursement of the first line of Islamic microfinancing facilities in 2011 and the eventual development of Salam, Murabahah and Ijarah microfinance products. Experts have, however, noted that the Ijarah and Salam facilities are not yet suited for the country due to its unfavorable tax environment, suggesting the need for a more comprehensive and enabling tax infrastructure.

Nonetheless, the prospective expansion of Islamic microfinance solutions in the Central Asian country by a private player – who is also targeting the SME community – promises further developments in the segment and wider industry. Mansoor M Ahmed, the assistant general manager at SRB, echoes this sentiment: “Our assignment as Shariah advisor by New Finance is part of a major initiative that is expected to significantly improve interest in Kazakhstan’s financial market.”

Indonesia: An IFN Correspondent Report

Indonesia’s government Sukuk update
The government of Indonesia through the Ministry of Finance (MoF) has held two Sukuk auctions in June 2015. The first one was held on the 3rd June and the second one was held on the 16th June. In the first auction, the MoF attracted incoming bids of IDR4.84 trillion (US$362.03 million) and successfully raised IDR1.69 trillion (US$126.41 million). The second auction attracted incoming bids of IDR4.47 trillion (US$334.36 million) and the amount raised was IDR2.69 trillion (US$201.21 million).

Today's IFN Alerts

MALAYSIA: CCM Duopharma Biotech secures RM245.12 million (US$64.58 million) commodity Murabahah term financing from RHB Islamic

PAKISTAN: State Bank of Pakistan declares a coupon rate of 6.93% for government Sukuk Ijarah

MALAYSIA: KL International Airport to redeem Sukuk today

GLOBAL: General Council for Islamic Banks and Financial Institutions admits four new members

IRAN: Iran eyes bigger stake in Islamic Trade Finance Corp in anticipation of sanctions relief

OMAN: Oman's pioneering Takaful funds stand at OMR24 million (US$62.13 million) in 2014

UK: Moody’s downgrades Azerbaijan’s banking system

PAKISTAN: JCR-VIS assesses Meezan Bank, Al Baraka Bank Pakistan and Burj Bank

GLOBAL: Moody’s confident in ASEAN banks’ compliance to stricter capital and liquidity under Basel III

PAKISTAN: Khyber-Pakhtunkhwa government replaces chairman of Bank of Khyber

REDmoney events

IFN Issuers Forum 2015
13th September 2015 (Dubai)

IFN Kuwait Forum 2015
5th October 2015 (Kuwait City)

IFN Egypt Forum 2015
27th October 2015 (Cairo)

IFN Turkey Forum 2015
17th November 2015 (Istanbul)

IFN Saudi Arabia Forum 2015
30th November 2015 (Jeddah)

REDmoney training

Funds Transfer Pricing
6th - 8th July 2015 (Hong Kong)

Managing Counterparty Credit Risk, Basel III and Recent Regulatory Issues
9th - 10th July 2015 (Hong Kong)

Understanding Islamic Contracts: Structuring & Legal Issues
17th - 19th August 2015 (Dubai)

Islamic Financial Services Act (IFSA) 2013 & Islamic Banking Products
18th & 25th August 2015 (Kuala Lumpur)

Shariah Audit & Governance for Islamic Banking
20th - 21st August 2015 (Kuala Lumpur)

Islamic Finance Qualification
23rd - 25th August 2015 (Dubai)

Advanced Sukuk & Islamic Securitization
24th - 26th August 2015 (Istanbul)

Undertaking Effective Litigation & Recovery in Islamic Finance Facilities
7th - 8th September 2015 (Kuala Lumpur)

Sharia’a Compliance & Audit for Islamic Banks
8th - 9th September 2015 (Dubai)

Funds Transfer Pricing
5th - 7th October 2015 (Kuala Lumpur)

Trading Book Market Risk Management for Financial Institutions
8th - 9th October 2015 (Kuala Lumpur)
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