GLOBAL:
Japan-based Bank of Tokyo-Mitsubishi UFJ (BTMU) is looking to float up to
US$500 million-worth of yen-denominated Sukuk in Malaysia, the world’s
largest Sukuk market, as a means of breaking into the rapid-growing
Islamic financial market of Southeast Asia and the Middle East. Subject
to necessary approvals, the Japanese bank is targeting Middle Eastern
pension funds and Islamic insurance companies, among others.
The issuance would mark the first
yen-denominated Sukuk, and it is hoped will build a channel for Japan to
attract Shariah compliant investments. Proceeds from the Sukuk will be
used to provide loans to infrastructure and energy-related development
projects. In a move aimed at tapping into the rapidly growing Islamic
financial market which has been expanding at double-digit rates, BTMU
expects to attract demand from investors seeking to diversify.
Driven by a need to finance its
economic transformation plan, Malaysia’s Sukuk market is expected to
witness a steady growth of 10% during 2014-15. According to a recent
research report by Moody’s, the projected growth is in line with
long-term growth trends in the global Sukuk market. The yearly issuance
of Malaysian Sukuk grew at a compounded annual growth rate of 22% to
US$33 billion in 2013, from US$3 billion in 2001. With deep local capital
markets and strong support from the government, Malaysia is anticipated
to remain the world's largest Sukuk market for the foreseeable future.
Moody’s has identified four key factors
that will drive the Malaysian Islamic debt market: (1) sovereign issuers
and private sector corporates seeking to raise funding to execute the
government's investment blueprint aimed at attracting US$444 billion in
investments from 2010-20 under the country's economic transformation program;
(2) Islamic banks' efforts to refinance and boost their capital bases due
to Basel III implementation; (3) more ASEAN palm oil producers tapping
the Malaysian Sukuk market for funds; (4) Malaysian issuers looking to
refinance US$40 billion of Sukuk maturing over the next three years.
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