The first gate

Rapids • Deals • News • Takaful • Asset Management • Ratings • Moves
11th February 2015 (Volume 12 Issue 06)
The first gate As we broach the end of the first month of the year, it is time to take a step back and reflect on the journey so far. 2014 was a sterling year for Islamic finance but this year looks set to be one of the best on record, despite the turbulence in the global financial markets. With oil prices recovering and the Fed rate on the up, we can only hope that the quarter continues its strong progress. With that in mind, our cover story this week sees S&P Dow Jones give IFN an exclusive analysis of the outlook for the Islamic debt capital markets and the prospects for the Sukuk sector for the rest of the year. Our IFN reports cover the Pakistani Takaful market and the GCC markets while our analyses focus on Yemen and securitization. Our correspondents this week come from Turkey, India, Qatar and Morocco while our features are contributed by Draznine Advisory on Brunei and Ernst & Young on securitization. We also have special reports on Islamic trade and the effects of the recent LMA LIBOR related changes contributed by Millennium Capital and Dentons respectively. We wish all our readers a successful week, and we look forward to seeing you again next Wednesday with more action-packed news from the Islamic finance industry. Cover Story Sukuk outlook strong as year powers on Following on from our update last week on the debt capital markets and the impact of increased capital raising from financial institutions on Sukuk issuance for 2015, this week we spread our gaze a little wider with an exclusive look at the outlook for the year from S&P Dow Jones Indices. LAUREN MCAUGHTRY speaks to the market to identify the key trends as we approach the end of the first quarter. IFN Reports • Pakistan — heading towards an overcrowded Takaful market? • Azerbaijan — a market to watch in 2015 • Al Rajhi changes strategy to boost standing in competitive Malaysian market • GCC — at the mercy of oil prices? • One-day IFN Student Forum — a collaboration between IFN and IBFIM • Sovereign Sukuk: Quiet markets • IFN Global Trendswatch • IFN Weekly Poll: What price will a barrel of oil be at close on the 31st December 2015? IFN Country Correspondents • Midpoint inflation forecast • Regulatory changes ease foreign investment process • A strong start to 2015 • Preparing the Shariah governance system for Islamic finance IFN Country Analysis • Yemen — a continuous struggle IFN Sector Analysis • Securitization in Islamic finance: An update Shariah Pronouncement A customer of an Islamic bank is a main contractor of a big development project. It has decided to hire a subcontractor for land leveling and grading Case Study DIB Tier 1 Sukuk: Setting stronger precedence for Islamic capital issuances Dubai Islamic Bank (DIB) on the 20th January 2015 successfully raised US$1 billion in Shariah compliant Tier 1 certificates. Incorporating a Basel III-style point of non-viability clause, the issuance is a perpetual callable Sukuk, carrying a return of 6.75%, payable on a semi-annual basis. Special Reports Recent LMA LIBOR related changes — their possible impact on Islamic finance documents The Loan Market Association (LMA) has recently updated its facility agreements, including changes to the interest rate definitions and mechanics. Many Islamic finance transactions use a conventional interest rate benchmark, such as LIBOR, to calculate the profit or variable rental, and so some of these changes may be relevant in those transactions. Buy Muslim: Islamic finance follows Islamic trade With capital moving freely within much of the developed world, HUSSAIN KURESHI believes the Muslim world should take heed and start working on developing infrastructure that allows for a free flow of capital and increased trade within the Muslim world. Features Is Islamic finance the right industry for Brunei? There is an intense pressure on Brunei Darussalam to diversify its economic reliance on oil and gas, which makes up 90% of the country’s current export. Critically, the problem is not only the fast-depleting oil resources, estimated to last another two decades, but also the recent crumbling of crude oil prices of more than 60% within just a few months. A Shariah compliant structure that can assist the power sector There has been a gigantic rise in the demand for energy (electricity) in correlation with the global population growth and development of industries. Power sector reforms at the private and government levels have been a key challenge for major countries.  CONTACTS Editorial: Sasikala Thiagaraja Direct Line: +603 2163 7800 ext 34 Finance: Faizah Hassan Direct Line: +603 2162 7800 ext 26 Sales: Dubai: Geraldine Chan Direct Line: +971 4 427 3628 Kuala Lumpur: Steve Stubbs Direct Line: +603 2162 7800 ext 55 Subscriptions: Dubai: Mithun Gangolli Direct Line: +971 4 427 3638 Kuala Lumpur: Siti Amilia Amir Amzah Direct Line: +603 2162 7800 ext 27