MALAYSIA: MARC affirms Bank Pembangunan Malaysia’s ratings with a stable outlook

Monday, 7th September 2015

S&P 500 Shariah Dow Jones Islamic World FTSE Shariah All World Russell - IdealRatings Islamic Global 1,680.04 2,667.01 1,830.46 1,769.16 ▼ -24.68 (-1.45%) ▼ -43.13 (-1.59%) ▼ -32.11 (-1.73%) ▲ 5.36 (0.30%)

HIGHLIGHTS: First Women Bank to tap Islamic banking market – GFH to delist from KSE – ICON to fund shipbuilding program with Islamic finance – Jordan signs agreement with ITFC – BLME appoints Michael Williams as CEO

This week's poll question: Tadawul closed at 9644.57 points the day before it opened to foreign investment (15th June 2015). Yesterday (Sunday 6th September) it closed at 7428.78. Where will it be at the end of the year?

Saudi issuers turning to Sukuk market despite weak oil price Daily Cover SAUDI ARABIA: Softer oil prices and wider weaker market sentiments may have dampened Islamic debt capital market activities in Saudi Arabia so far this year however the market may witness a change in pace over the next few months as investors adjust to higher level of market risks. Twelve months rolling data from Dealogic shows that Saudi Arabia has so far issued US$3.1 billion-worth of Sukuk, a far cry from the US$13.3 billion brought to market over the same period in 2014. And while macroeconomic conditions may be less-than-favorable for the Islamic bond segment (low oil prices, currency devaluation risks), it seems that institutions are growing increasingly less risk-averse, leading them to tap the segment. “Major issuers for Sukuk namely, GCC and Malaysia (with shares of 37.7% and 42.3% respectively) are more dependent on oil sector, but oil prices move in opposite directions with Sukuk Index since July 2015,” noted RHB Global Sukuk Markets Research in its latest commentary. “The correlation coefficient dropped as low as -0.51 seen on the 4th August, and it may suggest investors are willing to take more risk despite persistent low oil prices, in our opinion.” Just this week, it was confirmed that Abdullah Al Othaim Real Estate Investment and Development Company (OREIDCO) privately issued a SAR1 billion (US$266.46 million) Sukuk – marking the shopping mall-owner’s debut into the Islamic capital market. The five-year facility, managed by GIB Capital, NCB Capital and Saudi Fransi Capital (in their capacity as joint lead managers and joint bookrunners), was priced at six-month SAIBOR+1.7%. However, it is power company Saudi Electricity’s proposed Sukuk of up to US$1.5 billion which has the market talking. “It is positive news, after a quiet first half to 2015, that Saudi Electricity has announced that it will issue more Sukuk,” opined Jason Kabel, the head of fixed income at Bank of London and The Middle East. “Saudi Electricity is currently as close as investors can get to Saudi sovereign risk and as such investors will not be put off by the poor performance of this Sukuk when compared to similar issuance.” Another Sukuk facility to look forward to is Dammam-based Arab Petroleum Investments Corp’s maiden dollar Sukuk sale. The first tranche of the US$3 billion program is expected to be launched this year, paving the way for more issuers to follow suit and also for the multilateral development bank to position itself to become a regular international Sukuk issuer. Law & Regulations: An IFN Correspondent Report Truth in Lending Act disclosure changes finally here In the last few installments of this series, we’ve looked at how the TILA/RESPA Integrated Disclosure Rule (TRID) has made the lending process in the US and Canada more transparent. We have also spent some time on the history of this new set of rules and, in particular, how the new set of requirements will change the information that is found in all important documents like the closing disclosure (CD). IFN Weekly Poll In a bid to expand its Shariah banking industry, the Philippines recently filed a new Islamic banking bill. Assuming this legislation propels the country’s Shariah financing activities, in what areas will we see most growth? Following the filing of draft legislation for Islamic banking in Philippines last month, one cannot help but harbor hope for the bill to be passed. This would inevitably accelerate Shariah compliant financial transactions in the country amid a backdrop of vast untapped opportunities. This week IFN asks the industry of their view on Islamic finance in eastern republic. Determining the possible areas of growth, NABILAH ANNUAR explores the market. This week's poll question: Tadawul closed at 9644.57 points the day before it opened to foreign investment (15th June 2015). Yesterday (Sunday 6th September) it closed at 7428.78. Where will it be at the end of the year? Today's IFN Alerts SINGAPORE: Sabana REIT’s trustee enters into commodity Murabahah agreement of up to SG$50 million (US$35.07 million) with CIMB Bank PAKISTAN: Dubai Islamic Bank Pakistan plans flotation in the first quarter of 2016 GLOBAL: Malaysian offshore support vessel provider secures Islamic financing facility with Bank Islam Brunei Darussalam SOUTH AFRICA: National Treasury of South Africa latest issuer to join speaker line-up at the IFN Issuers Forum taking place on Sunday, the 13th September in Dubai BAHRAIN: GFH Financial Group to voluntarily delist from Kuwait Stock Exchange JORDAN: Government of Jordan inks US$3 billion agreement with Islamic Trade Finance Corporation to finance main imports GLOBAL: IFN welcomes Islamic finance expert Mohammed Khnifer as new columnist PAKISTAN: First Women Bank plans to launch Islamic banking window to expand business OMAN: Bank Nizwa expands branch network with new unit in Al Buraymi EGYPT: Tokio Marine Egypt General Takaful inaugurates new branch in Ismailia MALAYSIA: Moody’s affirms Sime Darby’s ratings, revises outlook to negative MALAYSIA: MARC affirms Bank Pembangunan Malaysia’s ratings with a stable outlook GLOBAL: Michael Williams to lead BLME Holdings as CEO while CFO Richard Williams to retire MALAYSIA: SME Bank appoints Faizah Mohd Tahir as non-executive chairman GLOBAL: IFN expands editorial content with new column by Mohammed Amin GLOBAL: Dr Ken Baldwin joins IFN team as new columnist UAE: President of the Securities and Exchange Organization of the Islamic Republic of Iran to address delegates at the IFN Issuers Forum in Dubai this September IVORY COAST: Sidra Capital and INOKS Capital sign on as lead partners for the Africa Islamic Finance Forum in September IVORY COAST: Director-general of Arab Bank for Economic Development in Africa confirms participation at the Africa Islamic Finance Forum in September

IFN Issuers Forum 2015 13th September 2015 (Dubai) Africa Islamic Finance Forum 2015 17th & 18th September 2015 (Abidjan, Cote d’Ivoire) IFN Kuwait Forum 2015 19th October 2015 (Kuwait City) IFN Turkey Forum 2015 17th November 2015 (Istanbul) IFN Saudi Arabia Forum 2015 30th November 2015 (Le Meridien Hotel, Jeddah) Undertaking Effective Litigation & Recovery in Islamic Finance Facilities 7th - 8th September 2015 (Kuala Lumpur) Structuring Islamic Financial Products 8th - 10th September 2015 (Kuala Lumpur) Sharia’a Compliance & Audit for Islamic Banks 8th - 9th September 2015 (Dubai) Trading Book Market Risk Management for Financial Institutions 9th - 10th September 2015 (Dubai) IFSA 2013 Compliance for Islamic Financial Institutions 29th September 2015 (Kuala Lumpur) Musharakah-Based Contracts & Financial Products 5th October 2015 (Kuala Lumpur) Trading Book Market Risk Management for Financial Institutions 8th - 9th October 2015 (Kuala Lumpur) Islamic Treasury & Risk Management Instruments 12th - 13th October 2015 (Kuwait) Structuring Islamic Legal Documentation 20th - 21st October 2015 (Kuala Lumpur)