Khazanah Nasional closes another Islamic deal in Hong Kong (By IFN)

See: http://redmoney.newsweaver.co.uk/11xjcoenq12h38rwoni3wx?email=true&a=6&p=22335245&t=20877705

GLOBAL: Malaysian sovereign wealth fund (SWF), Khazanah Nasional, has once again tapped the Islamic market for a China-related deal; issuing a US$358 million Sukuk convertible into shares of Hong Kong-listed Parkson Retail Group.

Khazanah owns around 7.8% of Parkson. Its Sukuk is exchangeable into its entire holdings in Parkson, equivalent to 220 million shares.

Speaking to Islamic Finance news, a banker involved in the transaction commented that: “The deal was smoothly executed and successfully priced at the tightest end of the guidance. It received overwhelming response from the investors; marking yet another successful foray by Khazanah into the exchangeable Sukuk market.”

Pricing for the papers, which mature in seven years, was fixed at 0% at its launch. However, the yield was offered in a range between -0.25%-0%; with a conversion premium of 25-30%.

The deal was arranged by CIMB, Deutsche Bank and JP Morgan; and saw over US$1.5 billion-worth of demand from over 100 investors. The investors reportedly include convertible bond hedge funds; while also comprising investors from Asia, who took up around half of the offering, Europe (30%) and the Middle East (20%).

The Sukuk is backed by Khazanah’s holdings in Parkson and follows a similar transaction in 2008, when the SWF raised US$550 million through a five-year Sukuk convertible into 44 million Parkson shares, equivalent to a 7.9% stake.

The equity backing the current Sukuk deal is also underlying the 2008 Sukuk; of which 55% remains outstanding.

RAM Ratings reaffirms YTL Power Generation's AA1 debt rating

Published on 14 March 2012

RAM Ratings has reaffirmed the AA1 rating of YTL Power Generation Sdn Bhd’s (“YTLPG” or “the Company”) RM1.3 billion Medium-Term Notes Programme (2003/2014) (“MTN Programme”), with a stable outlook. YTLPG, a wh
olly owned subsidiary of YTL Power International Berhad (“YTLPI”), is an independent power producer (“IPP”) that owns and operates 2 combined-cycle, gas-turbine power plants - in Paka, Terengganu (808 MW), and Pasir Gudang, Johor (404 MW).

YTLPG’s Power Purchase Agreement (“PPA”) with Tenaga Nasional Berhad guarantees the Company an income of at least RM1.1 billion, provided it delivers the minimum quantity of 7,450 GWh of electricity per year. However, we note that the amount of electricity generated in FYE 30 June 2011 (“FY June 2011”) was marginally lower than the take-or-pay minimum quantity due to curtailed gas supply. In this regard, the PPA allows YTLPG to reschedule its electricity generation by 9 months following any gas-supply interruption; the dip in sales had been compensated for by end-December 2011. Going forward, we envisage YTLPG to maintain its strong operational performance, premised on its commendable track record.

Over the next 3 years, YTLPG is projected to generate RM400 million of annual pre-financing cashflow against RM320 million of yearly debt obligations under its MTN Programme. Notably, YTLPG’s financing covenants do not prohibit additional borrowing, thus allowing it to procure and draw down RM600 million via a revolving credit (“RC”) facility in FY June 2011. Factoring in the repayment on the RC facility and given the approaching expiry of the PPA in September 2015, YTLPG’s external debt obligations will exceed its annual pre-financing cashflow in both fiscal 2013 and 2014; the Company will draw on its cash reserve to meet its due. Nevertheless, we expect parent YTLPI to step in with financial support to service YTLPG’s debt obligations, if required; we have observed similar trends in the past given that the Company is one of YTLPI’s key subsidiaries.

Looking forward, we can derive comfort from YTLPI’s healthy credit position, underscored by its robust business profile and ample liquidity. However, site concentration risk remains a key risk to YTLPG despite of it operating in 2 different locations. Similar to other IPP, YTLPG remains exposed to regulatory risks.


Media contact
Davinder Kaur Gill
(603) 7628 1118
davinder@ram.com.my

Rubberex fully redeems bonds before maturity

Published on 14 March 2012

Rubberex Corporation (M) Berhad (“Rubberex”) has made an early redemption on the RM1 million of outstanding notes under its RM50 million Medium-Term Notes Programme (2006/2013). The debt facility has consequently been cancelled. Following this, RAM Ratings no longer has any rating obligation on the facility, which had been previously rated A2, with a negative outlook.

Media contact
Amy Lo
(603) 7628 1078
amy@ram.com.my

MARC AFFIRMS ITS AAAIS, AAIS, AND AIS RATINGS ON DURA PALMS SDN BHD'S SUKUK IJARAH SERIES

Mar 6, 2012 -
MARC has affirmed the ratings of Dura Palms Sdn Bhd’s (Dura Palms) RM100 million Series A, RM90 million Series B and RM10 million Series C Sukuk Ijarah at AAAIS, AAIS and AIS respectively. The ratings carry a stable outlook. The rating action affects RM134.0 million of total outstanding sukuk comprising RM64.0 million Series A sukuk, RM60.0 million Series B sukuk and RM10.0 million Series C sukuk.

Dura Palms is a special purpose company and wholly-owned subsidiary of Teck Guan Holdings Sdn Bhd (Teck Guan) created for the purpose of issuing the Sukuk Ijarah to facilitate the sale and leaseback of 6,861 hectares of oil palm plantation estates (the securitised estates) owned by Teck Guan’s subsidiaries, Andum Sdn Bhd, Happy Valley Plantation Sdn Bhd and Teck Guan Plantations Sdn Bhd (the sellers/lessees).

The affirmed ratings reflect the strong performance of the securitised estates, satisfactory loan-to-value (LTV) and debt-service coverage ratios (DSCR) consistent with the respective ratings and credit protection features within the transaction’s structure. Under the terms of the transaction, Dura Palms possesses a put option, exercisable upon expected maturity of the Sukuk Ijarah, to sell the securitised estates to the sellers/lessees and use the proceeds thereof to redeem the outstanding Sukuk Ijarah. Should this fail, the assets can be sold to third parties to repay the remaining Sukuk Ijarah before the legal maturity date. In addition, the Sukuk Ijarah benefits from an irrevocable undertaking by Teck Guan to provide liquidity support in the event that Dura Palms or the sellers/lessees are unable to fulfil their obligations with respect to the Sukuk Ijarah.
The securitised estates posted a total fresh fruit bunches (FFB) yield of 139,493 MT for its financial year ended January 31, 2011 (FY2011) compared to 162,007 MT in FY2009.

Production over the reviewed period was 13.9% lower than the previous period due to a combination of replanting of mature palm trees, unfavourable weather and biological tree stress. Nonetheless, the estates continued to show average yield per hectare of planted area above industry benchmarks at 22.4 MT/ha (FY2010: 25.0 MT/ha). Subsequently, in the nine-month period ended October 31, 2011 (9MFY2012), the securitised estates’ average yields rose to 18.67 (FY2011: 15.1 MT/ha), which were also well above the industry average yield of 15.28 MT/ha.

Meanwhile, the net operating income (NOI) results of the securitised estates have stayed above MARC’s assumed stabilised level (RM28.3 million), based on above-average yield performance and relatively strong average FFB prices (RM550/MT in both FY2011 and FY2010). For the nine-month period ended October 31 2011 (9MFY2012) and FY2011, the estates recorded NOI figures of RM54.4 million and RM35.1 million respectively. Scheduled amortisation has caused loan-to-value (LTV) ratios to improve to 24.8% and 48.1% for the Series A and B sukuk respectively. MARC has maintained its discounted cash flow valuation of the securitised estates unchanged at RM258.0 million, taking a forward-looking view of the likely range of collateral performance over the intermediate term.

The stable outlook for the Sukuk Ijarah reflects MARC’s opinion that the securitised estates will continue to perform within expectations. MARC believes that refinancing risk at the final maturity of the Sukuk Ijarah is largely mitigated by the value and saleability of the securitised estates which will support redemption of the Sukuk Ijarah by way of disposal of the securitised estates.

Contacts:
Sandeep Bhattacharya, +603-2082 2247/ sandeep@marc.com.my;
Ruben Khoo, +603-2082 2265/ rubenkhoo@marc.com.my.

Bahrain bouncing back? (By IFN)

See: http://redmoney.newsweaver.co.uk/934j5gddnt9h38rwoni3wx?email=true&a=6&p=22079985&t=20821355

BAHRAIN: Despite talk of the kingdom losing its sheen as a financial hub amid its political instability, new data shows that a growing number of financial institutions registered in Bahrain up to the end of January, bringing the amount registered to 415 from 403 a year earlier.

While banks such as Crédit Agricole CIB and BNP Paribas grabbed headlines last year on news that some of its operations in Bahrain will move to Dubai, it has since emerged that those decisions were not based on the political situation in the kingdom. Instead, Bahrain’s financial sector has appeared to remain resilient, charting a 1.7% growth during the first half of last year.

According to data from the Bahrain Economic Development Board (EDB), among new financial firms that registered in the kingdom in 2011 include India’s Canara Bank, AMP Capital Investors from Australia and Deloitte Corporate Finance.

“That these businesses are choosing Bahrain as their base for accessing the Gulf economies and the wider Middle East is testament to the strength of the local Bahrain workforce, the quality of the Central Bank of Bahrain’s regulation and the access we provide to the strong-growing Gulf market,” said Mohammed Essa Al-Khalifa, the chief executive of the EDB.

Furthermore, while a need for consolidation in the financial industry remains and despite the dead-end in merger negotiations between Bahrain Islamic Bank and Al Salam Bank-Bahrain; local banks appear positive of bright prospects ahead. These include local giant Al Baraka Banking Group, which has projected a 15% growth in group profits this year and has embarked on an aggressive expansion plan covering Algeria, Egypt, Indonesia and Turkey.

Bankers are also reportedly looking toward a recovery in local infrastructure spending, which has been estimated at between US$15-20 billion in the next two-three years, in addition to the kingdom’s proximity to Saudi Arabia, to boost business.

Nonetheless, it cannot be ignored that concerns remain, with market players noting local bank liquidity levels; with a number of maturities due this year, the closure of retail shops, lower office occupancy levels and rising unemployment as among limitations that still prevail.

RAM Ratings puts Cerah Sama's Islamic securities on Rating Watch with developing outlook

Published on 02 March 2012
RAM Ratings has placed the AA3 rating of Cerah Sama Sdn Bhd’s (“Cerah Sama”) RM600 million Sukuk programme on Rating Watch, with a developing outlook. Cerah Sama is the investment-holding company that wholly owns Grand Saga Sdn Bhd (“Grand Saga”), the toll operator and concessionaire for the Cheras-Kajang Highway (“the Highway”).

This rating action follows the Government’s announcement that toll collection will be abolished at 2 points (out of 4) along the Highway. Effective 2 March 2012, toll users will be exempted from paying the RM1.00 tariff at the Batu 9 toll plaza when heading towards Kuala Lumpur, and the RM0.90 tariff at the Batu 11 toll plaza when heading towards Kajang (from Kuala Lumpur). The repayment of Cerah Sama’s Sukuk programme is anchored by toll revenue from the Cheras-Kajang Highway.

We expect the Rating Watch to be resolved once the Highway’s compensation terms are made known to us, as any changes to the concession terms will need to be reassessed for credit implications. We note that Grand Saga had been adequately compensated by the Government for previous amendments of its concession agreement.

RAM Ratings' Rating Watch highlights a possible change in an issuer's debt rating. It focuses on identifiable events such as mergers, acquisitions, regulatory changes and operational developments that place a rated debt under special surveillance by RAM Ratings. In a broader sense, it covers any event that may result in changes in the risk factors relating to the repayment of principal and interest.

Issues will appear on RAM Ratings' Rating Watch when some of the above events are expected to or have occurred. Appearance on RAM Ratings' Rating Watch, however, does not inevitably mean that the rating will be changed. It only means that a rating is under evaluation by RAM Ratings and a final affirmation is expected to be announced. A "positive" outlook indicates that a rating may be raised while a "negative" outlook indicates that a rating may be lowered. A “developing” outlook refers to those unusual situations in which future events are so unclear that the rating may potentially be raised or lowered.

Media contact
Davinder Kaur Gill
(603) 7628 1118
davinder@ram.com.my

MARC AFFIRMS ITS RATINGS ON SENAI-DESARU EXPRESSWAY BERHAD’S SENIOR AND JUNIOR SUKUK; REVISES OUTLOOK TO NEGATIVE

Mar 2, 2012 -

MARC has affirmed its ratings of A+IS and A-IS on Senai-Desaru Expressway Berhad's (SDEB) RM1.89 billion nominal value Senior Sukuk Ijarah Medium Term Notes (Senior Sukuk) Programme and RM3.69 billion nominal value Junior Sukuk Ijarah Medium Term Notes (Junior Sukuk) Programme. SDEB, a 70:30 joint-venture between Rancak Bistari Sdn Bhd and Johor state-owned YPJ Holdings Sdn Bhd, is the concessionaire and highway operator of the Senai-Pasir Gudang-Desaru Expressway (E22). The rating outlook has been revised to negative from stable to reflect pressure on SDEB’s financial profile arising from the significant under-performance of traffic on E22 relative to the traffic consultant’s projections. The actual traffic generally tracks MARC’s worst-case scenario estimates. While SDEB’s satisfactory liquidity position provides a degree of certainty that it will be able to meet its short-term obligations, MARC opines that meaningful and sustained improvement in traffic volumes during the current ramp-up phase will be needed to offset the downward rating pressure. Extended underperformance of traffic on E22 will result in finance service coverage levels and liquidity that would no longer be consistent with current ratings.

Actual traffic on E22 was only 48% of projections in the first 11 months of 2011. The lower traffic volume was partly due to the late opening of the last stretch of the highway from Pasir Gudang to Desaru. The E22’s first phase which links Senai to Pasir Gudang (Package 1 and Package 2) had commenced tolling on October 10, 2009. The expressway’s Package 3, which links Pasir Gudang to Desaru, was opened to the public on June 10, 2011 after a four-month delay and commenced tolling on July 10, 2011. Average daily traffic continues to be 35% below projections following the full opening of the highway. Traffic volume on the E22 has been heavily affected by the availability of alternative toll-free routes and high toll-differential between the E22 and the North-South Expressway.

Reflecting the underperformance of traffic on the E22, SDEB’s revenue in the financial year ending June 30, 2011 (FY2011) was 54.6% below projections at RM13.2 million (FY2010: RM7.1 million). Operating profit for FY2011 had declined to RM2.6 million compared to FY2010’s operating profit of RM16.4 million. The prior fiscal year results had benefited from RM25.3 million of compensation arising from construction delays. Despite the lower-than-expected revenue figures, SDEB’s liquidity position appears to be sufficient to meet its operational requirements and debt obligations in the next 18 months, with cash flow from operations (CFO) and cash and bank balances of RM0.55 million and RM46.7 million respectively (FY2010: RM17.0 million; RM141.4 million) vis-à-vis projected figures of RM0.76 million and RM52.8 million respectively.

MARC will continue to monitor traffic volume of the E22 closely and SDEB’s credit metrics to the extent that downside risks would be primarily driven by extended underperformance of traffic and deteriorating liquidity. Conversely, the rating may be revised to stable if deviations from base case traffic and cash flow projections narrow to a meaningful extent.

Contacts:
Jason Kok, +603-2082 2258/ jason@marc.com.my;
David Lee, +603-2082 2255/ david@marc.com.my;
Sandeep Bhattacharya, +603-2082 2247/ sandeep@marc.com.my.

MARC LOWERS DEBT RATING OF STATE BANK OF INDIA TO AA FROM AA+ FOLLOWING METHODOLOGY REFINEMENT; OUTLOOK STABLE

Mar 2, 2012 -
MARC has downgraded the State Bank of India’s (SBI) Senior Unsecured Bonds of RM500 million to AA from AA+ following the incorporation of transfer and convertibility (T&C) risk into the ratings of ringgit-denominated debt issuances by foreign issuers. The outlook is stable.
Under the refined methodology, MARC’s approach going forward will be to cap the ratings of non-sovereign foreign issuances at the relevant foreign currency ceiling unless there is compelling evidence to suggest that the issuer can be assured of unimpeded access to foreign currency needed for debt service under a scenario in which the sovereign is facing a foreign currency-generated liquidity crisis. MARC’s downgrade of SBI’s bond rating does not reflect deterioration in the rating agency’s sovereign credit rating on the Government of India (GOI). The rating agency had not previously incorporated T&C risk into SBI’s debt rating.

The downgrade aligns SBI’s debt rating to MARC’s national scale rating on the Indian sovereign which also operates as the ‘rating floor’ for systemically important Indian banks. MARC considers that SBI is materially exposed to GOI’s sovereign credit risk due to its significant exposure to government securities and the domestic operating environment. SBI’s credit strengths continue to include its dominant market position as India’s largest commercial bank, its solid access to customer funding and its high likelihood of receiving government support in the event of need. The recent weakening of SBI’s asset quality metrics and capitalization is partly offset by the bank’s track record of profitable operating performance, and expectation of improving capital strength in the near-term.
The stable outlook on the rating is primarily driven by MARC’s stable rating outlook on the ‘AA’ foreign currency country ceiling for ringgit-denominated debt issued by Indian issuers. In light of the interplay between MARC’s bond rating on SBI and the rating agency’s foreign currency country ceiling on India, the issue rating of the majority state-owned financial institution and corresponding rating outlook are expected to be primarily driven by MARC’s rating on the Indian sovereign. A change in the foreign currency country ceiling on India will necessitate a review of SBI’s bond rating to the extent that a downgrade will trigger a lowering of SBI’s bond rating while an upgrade could support a higher rating on SBI.

SBI operates with an extensive network of 13,772 domestic and 174 international offices/branches spread across 33 countries as at December 31, 2011. As India’s oldest and largest bank, it possesses an entrenched and stable franchise with a market share of between 16.2% and 16.5% in domestic deposits and loans as at December 31, 2011. Over the past few years, SBI has been steadily expanding its international operations; foreign operations contributed 5.7% and 11.6% of the bank’s revenue and assets respectively for the financial year ended March 31, 2011 (FY2011). SBI’s expanding international operations offer increased asset diversification.

SBI’s liquidity remains healthy; the bank continues to benefit from a stable deposit base and a moderate loan to deposit ratio of 84.6% as of end-December 2011. In FY2011, SBI’s net loans expanded by 19.8% (FY2010: 16.5%) while its deposits increased 16.1% (FY2010: 8.4%). The bank’s current and savings accounts (CASA) to deposits ratio remained favourable at 47.5% as at end-December 2011. SBI’s strong CASA ratio continues to be viewed as a positive rating factor, particularly in a rising interest rate environment as witnessed by the Indian banking system in the 2011 calendar year. The bank’s reported interest spread widened during the first half of FY2012. SBI’s holdings of liquid assets were 26.3% of total assets as at end-December 2011 (FY2011: 28.9%).

SBI’s return on assets (ROA) has exhibited a declining trend since FY2010; after-tax profit growth has been affected by higher credit costs and staff cost increases. Provisions for non-performing assets (NPAs) net of write-backs amounted to Rs87.9 billion or 34.7% of pre-provision operating profit in FY2011, and remained elevated at Rs87.1 billion or 39.6% of pre-provision operating profit for the first nine months of FY2012. The higher loan loss provisioning was necessitated by the upward trend in gross NPAs as well as tightened regulatory loan loss provisioning requirements. Staff costs, meanwhile, rose 13.5% in FY2011 as a result of higher gratuity and pension provisioning in addition to increased staff strength. In 9MFY2012 (April 2011 to December 2011), provisions for superannuation benefits moderated to Rs24.2 billion from Rs31.3 billion in 9MFY2011. SBI’s resilient core profitability and growth in its net interest income has allowed the bank to absorb the high provisioning costs and write-offs in recent periods relatively well. However, SBI will require capital infusion in the near term to maintain the growth momentum in its net interest income.

SBI has experienced asset quality deterioration, as indicated by rising gross and net NPA ratios. SBI’s reported gross non-performing loan (NPL) ratio rose to 4.61% as at end-December 2011 from 3.17% a year ago. SBI’s net NPA ratio stood higher at 2.22% as at end-December 2011 compared to 1.61% a year ago. Fresh slippages in the three months to December 31, 2011 (Q3FY2012) remained high at Rs81.61 billion (Q2FY2012: Rs80.16 billion), with the bulk coming from large corporate and mid-corporate accounts linked to sectors such as iron and steel, metal and mining, textiles, real estate and agriculture. Slippages from its restructured loan book stood at Rs96.83 billion. MARC notes that SBI was earlier given a one-year extension by the Reserve Bank of India (RBI) to September 2011 to achieve a provision coverage ratio (PCR) of 70%. Since then RBI has relaxed the requirement; SBI’s PCR was 67.25% as at end-June 2011 against the required 70%, but has since dropped to 62.52% as at end-December 2011.

SBI’s Tier-1 capital adequacy ratio (CAR) and total CAR of 7.59% (FY2010: 9.45%) and 11.60% (FY2010: 13.39%) respectively as at end-December 2011 are currently weak for its rating level, largely as a result of the Rs79.27 billion of pension liability provisions charged to its capital reserves in FY2011. MARC takes comfort from the fact that the GOI approved an Rs79 billion capital infusion into SBI on the January 31, 2012. The capital infusion, which is expected to take place during the current fiscal year, will take the form of a preferential allotment of shares to the GOI and would raise Tier 1 capital to about 8% and the government’s shareholding in SBI to around 65%.

Contacts:
Lim Mei Ching, +603-2082 2267/ meiching@marc.com.my;
Milly Leong, +603-2082 2275/ milly@marc.com.my;
Sandeep Bhattacharya, +603-2082 2247/ sandeep@marc.com.my.

RAM Ratings downgrades Silver Bird’s ratings to C3/NP, with negative Rating Watch

Published on 01 March 2012

RAM Ratings has downgraded the respective long- and short-term ratings of Silver Bird Group Berhad’s (“SBGB” or “the Group”) RM30 million Commercial Papers/Medium-Term Notes Programme (2005/2012) (“CP/MTN”), from A2 (negative outlook) and P2 to C3 and NP. We have concurrently placed the Group on Rating Watch, with a negative outlook.

The steep downgrade is premised on the heightened likelihood of default on the Group’s CP/MTN following a series of unfavourable developments announced on 29 February 2012. These include the failure of its wholly owned subsidiaries to repay their banking facilities amounting to RM5.37 million, a disclaimer of opinion expressed by the auditors on the Group’s audited accounts for FYE 31 October 2011 (“FY Oct 2011”), and the suspension from work of 3 key personnel (the group managing director, the executive director and a senior member of its management team).

Based on the terms of the CP/MTN and as stated in the trust deed, the default on the Group’s banking facilities constitutes a cross-default on the CP/MTN if the noteholders wish to exercise their rights. Meanwhile, the suspension from work of the 3 key personnel is to facilitate an internal inquiry into allegations of, among others, irregularities in the Group’s accounts. SBGB’s board has initiated a forensic review of its accounts, to be completed within 3 months. The Group is also expected to announce its plan on the regularisation of the abovementioned selective defaults.

Under the circumstances, RAM Ratings opines that SBGB’s repayment capacity on its RM15 million of outstanding CP/MTN (due on 15 April 2012) is now highly questionable. We note that certain numbers in the Group’s just-released audited FY Oct 2011 accounts vary substantially from those stated in its quarterly results announced on 30 December 2011. In particular, SBGB’s cash balances have been restated at only RM3.56 million, in contrast to the earlier RM35.84 million. Even if its repayment aptitude were to remain intact, the Group may opt to suspend payment of its financial obligations until the findings of the forensic review are revealed (i.e. as in the case of its subsidiaries’ RM5.37 million of banking facilities), which is likely to only take place after the maturity of the CP/MTN.

The negative outlook on SBGB’s previous ratings had reflected our concerns over its ability to expand its market share in the premium-bread market and preserve its already-thin margins amid rising costs. Moreover, the Group’s recent venture into the manufacture of dairy products exposes it to new risks.

The Rating Watch may be resolved following the completion of SBGB’s forensic review and regularisation plan, provided these are completed before 15 April 2012. Alternatively, the ratings will be downgraded to D should the Group fail to redeem the outstanding CP/MTN upon maturity.

RAM Ratings' Rating Watch highlights a possible change in an issuer's debt rating. It focuses on identifiable events such as mergers, acquisitions, regulatory changes and operational developments that place a rated debt under special surveillance by RAM Ratings. In a broader sense, it covers any event that may result in changes in the risk factors relating to the repayment of principal and interest.

Issues will appear on RAM Ratings' Rating Watch when some of the above events are expected to or have occurred. Appearance on RAM Ratings' Rating Watch, however, does not inevitably mean that the rating will be changed. It only means that a rating is under evaluation by RAM Ratings and a final affirmation is expected to be announced. A "positive" outlook indicates that a rating may be raised while a "negative" outlook indicates that a rating may be lowered. A “developing” outlook refers to those unusual situations in which future events are so unclear that the rating may potentially be raised or lowered.

Media contact
Low Pui San
(603) 7628 1051
puisan@ram.com.my

Sukuk in the pipeline (By IFN)

See: http://redmoney.newsweaver.co.uk/6vcocsmwafah38rwoni3wx?email=true&a=6&p=21893445&t=20781975

TUNISIA: The Tunisian government is looking to issue the country’s first sovereign Sukuk this year to finance the budget deficit incurred during last year’s uprising. Adnan Ahmed Yousif, the CEO of Al Baraka Banking Group, revealed that the government is currently in talks with banks with regards to a potential issuance. “They are very serious about it,” he added. Al Baraka Bank is also currently consulting the Tunisian government on Islamic finance, although it was not revealed if the bank is also providing consultation on the Sukuk.

It was revealed just yesterday that the Tunisian government is looking to become an Islamic finance hub in Africa, and is set to establish a legal framework to regulate the country’s Islamic finance industry. Hamadi Jebali, the interim prime minister revealed that the country would need US$35 billion to US$45 billion to finance its development projects, and is looking to the IDB for support. Ahmed Mohamed Ali, the president of the IDB, also acknowledged the potential for infrastructure and development projects in the country, and to see the Tunisian private sector play a more significant role in the implementation of the bank's projects in Tunisia and Africa. He also added: “The French Development Agency had recently suggested to the IDB drawing up a microfinance program in Tunisia.”

Libya and Egypt are also ramping up their Islamic finance efforts to fund budget deficits incurred during the uprisings and to finance re-building and infrastructure projects. Libya has also recently revealed its aspirations to create an Islamic finance framework to regulate the country’s fledgling industry.