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MALAYSIA:
Najib Razak, the prime minister, unveiled several key incentives for the
Islamic finance industry during his tabling of Budget 2013 on the 28th
September 2012, as Islamic banking assets continued to grow at a strong pace
in the first seven months of this year.
Initiatives announced under the federal budget for next
year include a double tax deduction for additional expenses incurred in the
issuance of retail bonds and Sukuk for 2012-2015. Individual investors will
also be exempt from paying stamp duties on retail Sukuk and bond
transactions. The measures follow stock exchange operator Bursa Malaysia’s
introduction of rules on the listing of exchange traded bonds and Sukuk on
the 27th September.
The government also proposed a double tax deduction for
expenses related to the issuances of “agroSukuk” for 2012-2015. “With the
availability of instruments such as agroSukuk, it will raise capital for
finance companies and agro-based farming while revitalizing the country’s
capital and equity markets. We are confident that it will propel Malaysia’s
ambitions to become a major hub for Islamic finance and particularly
cross-border Sukuk issuance,” commented Abdul Jalil Abdul Rasheed, CEO of
Aberdeen Islamic Asset Management.
Industry players were largely positive on the incentives
announced under the budget, noting that the tax breaks for agroSukuk will
help boost Sukuk issuances by agriculture firms. However, speaking to Islamic
Finance news
on the sidelines of the IFN Asia Forum 2012, one banker questioned the relevance
of the initiative. “How many agricultural companies are there in Malaysia
which have good credit standing and are actually able to issue Sukuk?” opined
the banker.
Meanwhile, the government also released its economic report
2012/2013, which showed that the market share of Islamic banking assets grew
20.6% from the beginning of the year to July, accounting for 24.2%, or RM69.5
billion (US$22.17 billion) of Malaysia’s total banking assets as at the end
of July. Takaful assets rose to RM18.3 billion (US$5.84 billion) during the
seven-month period, accounting for 9% of total insurance and Takaful industry
assets.
Islamic financing made up 26.6% of total loans and
financing as at the end of July; higher than the 25.9% recorded at the end of
2011. By 2020, Islamic financing is projected to account for 40% of total
financing in the country.
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Thursday, October 4, 2012
Prime minister announces Islamic finance incentives under Budget 2013 (By IFN)
Monday 1st
October 2012
RAM Ratings reaffirms Toyota Capital’s debt ratings, revises outlook to stable; P1(s) rating assigned to RM600 million CP Programme
Published on 28 September 2012
RAM Ratings has reaffirmed the AAA(s)/P1(s) ratings of
Toyota Capital Malaysia Sdn Bhd’s (“Toyota Capital” or “the Company”) RM1.0
billion Islamic Commercial Papers/Medium-Term Notes Programme (2008/2015)
(“Islamic CP/MTN Programme”), as well as the AAA(s) rating of the Company’s
RM1.2 billion MTN Programme (2008/2018). At the same time, RAM Ratings has
assigned a P1(s) rating to Toyota Capital’s RM600 million CP Programme.
Concurrently, the outlook on the reaffirmed long-term ratings has been revised
from negative to stable.
The enhanced ratings of Toyota Capital’s CP and MTN
Programmes reflect the credit strength of the irrevocable and unconditional
guarantee extended by Toyota Motor Finance (Netherlands) BV (“Toyota
Netherlands”), a fully owned subsidiary of Toyota Financial Services
Corporation (“Toyota Financial Services”). RAM Ratings notes that Toyota
Netherlands has a credit-support agreement with Toyota Financial Services; in
turn, Toyota Financial Services also has a similar contract with Toyota Motor
Corporation of Japan (“Toyota Motor” or “the Group”). As such, the ultimate
support from Toyota Motor enhances the credit profiles of the conventional debt
facilities beyond Toyota Capital’s stand-alone credit strength. Meanwhile, the
ratings of the Islamic CP/MTN Programme are underpinned by a Purchase
Undertaking from Toyota Capital, which is in turn backed by an irrevocable and
unconditional guarantee extended by Toyota Netherlands, with the ultimate
credit support stemming from Toyota Motor.
Toyota Motor’s strong business profile is underscored by its
position as one of the world’s largest vehicle manufacturers. The revision of
the long-term rating outlook, from negative to stable, is premised on the
Group’s resilient business profile, as evidenced by its healthier earnings in
1Q FYE 31 March 2013 (“FY Mar 2013”), underpinned by the recovery of its sales
and production in almost all markets. The Group has recovered from the
production disruptions caused by the Japanese earthquake and prolonged flooding
in Thailand in 2011; production levels have been in full swing since early this
year. The long-term ratings also reflect Toyota Motor’s solid global
positioning, strong financial profile with superior liquidity, and geographical
diversity. These strengths are, however, moderated by the keenly competitive
global auto industry, Toyota Motor’s vulnerability to foreign-currency
fluctuations and its laggard position in certain emerging markets.
Ultimately owned by Toyota Motor, Toyota Capital is
primarily a financier for Toyota vehicles in Malaysia; its goal is to
complement and support the sale of this marque here. On this note, the Company
derives support and financial flexibility from its ultimate shareholder. Its
asset quality stayed solid as at end-March 2012, with a low gross impaired-loan
(“GIL”) ratio of 0.42% and a credit-cost ratio of 0.25% (end-March 2011: 0.57%
and 0.21%). At the same time, the Company’s GIL coverage ratio stood at a
robust 238.3%. Underpinned by its prudent credit-underwriting standards, Toyota
Capital’s asset quality is expected to remain solid.
In tandem with an enlarged gross receivables base (end-March
2012: RM3.3 billion; end-March 2011: RM2.7 billion), the Company’s interest
income ascended 14% year-on-year (“y-o-y”) to RM192 million in fiscal 2012.
Nevertheless, its net interest margin narrowed from 2.7% to 2.5% y-o-y amid
stiff competition and higher funding costs. Toyota Capital’s adjusted net
gearing ratio hit a high of 16.4 times as at end-March 2012, as more debt had
been assumed to fund its expanding auto-financing business. Concerns over its
high gearing level are, however, partly mitigated by the expected support from
Toyota Motor, if needed. The provision of auto-financing services to mainly
Toyota and Perodua vehicles also gives rise to a certain degree of
concentration risk.
Media contact
Juliana Koay
(603) 7628 1169
Wednesday, October 3, 2012
GFH confirms involvement in takeover of Leeds United Football Club (By IFN)
Friday 28th
September 2012
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GLOBAL:
Following intense speculation that GFH Capital, the Dubai-based private
equity arm of Bahrain’s Gulf Finance House (GFH), was in talks to acquire UK
football side Leeds United Football Club (LUFC), GFH finally broke its
silence to confirm that its unit is involved in the deal.
In a statement to the Bahrain Bourse on the 27th
September 2012, GFH said that: “GFH would like to confirm that GFH Capital, a
100% subsidiary of GFH, has signed an exclusive agreement to lead and arrange
the acquisition of Leeds City Holdings, the parent company of LUFC.”
The Shariah compliant investment bank also cited a study by
Deloitte, stating that as one of the best supported clubs in English
football, LUFC sees a higher-than-average match day attendance than most
Premier League teams. LUFC however currently plays in the English Football
League Championship, the UK’s second-tier football championship that is a
level below the Premier League.
GFH also noted that UK football teams have received a
significant revenue boost due to the renegotiation of broadcasting rights,
with expectations that starting from the 2013-2014 season, each premiership
side will receive at least GBP60 million (US$97.52 million) each season due
to the higher broadcasting rights.
“LUFC would also benefit from this if it can achieve
promotion to the Premier League,” said GFH.
A point to note in the potential GFH Capital-LUFC deal is
that the transaction is not just driven by financial concerns but also by the
personal interest of David Haigh, the deputy CEO and chief operating officer
of GFH Capital. Haigh, whose parents are from Leeds, a city in the county of
Yorkshire in the UK, is a loyal fan of the football club, often publicizing
his support for the club via social networking site Twitter.
Haigh did not respond to a request for comment from Islamic
Finance news,
but had once again taken to his Twitter account shortly after GFH announced
the deal to thank LUFC fans for their messages of support.
In its statement, GFH also said that it could not provide
further details on the commercial terms of the transaction due to a
confidentiality provision.
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Bursa Malaysia introduces rules on listing of exchange traded bonds and Sukuk (By IFN)
Thursday 27th
September 2012
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MALAYSIA:
Bursa Malaysia, the stock exchange operator, introduced rules for the listing
of exchange traded bonds and Sukuk (ETBS) on the 26th September
2012, following its issuance of a consultation paper seeking feedback on the
new products in May.
The exchange is now working with issuers for the potential
listing and trading of their Sukuk and bonds.
The new rules have been published just after Securities
Commission Malaysia launched its framework for ETBS early this month,
allowing retail bonds and Sukuk to be issued and traded on the stock exchange
or over-the-counter through appointed banks.
The introduction of ETBS to the Malaysian market is aimed
at attracting retail investor participation in bond and Sukuk sales, while
increasing the range of tradable products on Bursa Malaysia. “We are creating
an environment that provides something for every type of investor,” said
Tajuddin Atan, CEO of Bursa Malaysia.
In addition, Sukuk and bond issuers will be able to benefit
from greater flexibility in their fundraising exercises. The initiative is
also a project under the government’s economic transformation program.
In its introductory phase, investors will be allowed to
invest in Sukuk and bonds sold or guaranteed by the Malaysian government,
with investments in debt issuances from public listed companies and banks
likely to be introduced next year. The authorities are expected to issue
rules on investing in corporate debt issuances in January 2013.
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MARC AFFIRMS ITS MARC-1/A+ RATINGS ON RADICARE (M) SDN BHD’S RM100 MILLION CP/MTN FACILITY
Sep 28, 2012 -
MARC has affirmed the ratings on Radicare Sdn Bhd’s
(Radicare) RM100 million CP/MTN facility at MARC-1/A+. The rating outlook is
revised to stable from negative.
The rating action incorporates the indefinite extension of
Radicare’s concession agreement (CA) granted by the Malaysian government after
the expiry of a six-month extension in April 2012. The extension which will be
in force until a new CA is concluded, has eliminated non-renewal risk. MARC
understands that Radicare has had a series of negotiations with the government
on the terms and scope of works that would be undertaken under the new CA which
is pending government’s approval. Radicare currently provides non-clinical
support services to 41 government hospitals and six medical institutions under
the 15-year CA that had ended on October 27, 2011 before the extensions were
granted.
MARC observes that the company has pared down its total
borrowings in recent years. Total borrowings which stood at RM118.5 million as
at December 31, 2011 (FY2011) declined to RM75.3 million by end-June 2012 and
were fully repaid on September 25, 2012. MARC notes that Radicare’s high trade
receivables, consisting mainly of payments from the government, have weighed on
its working capital requirements. As at June 30, 2012, trade receivables stood
at RM209.9 million (FY2011: RM171.3 million). However, sizeable collections
were received subsequent to June 2012 which were partly utilised for the
payment of its debt obligations, including the early redemption of the RM35 million
outstanding under the CP/MTN facility before its maturity on November 9, 2012.
The CP/MTN facility will expire on November 28, 2012, and
upon expiry, MARC will no longer provide rating surveillance and will withdraw
its ratings.
Contacts:
Nisha Fernandez, +603-2082 2269/ nisha@marc.com.my;
Rajan Paramesran, +603-2082 2233/ rajan@marc.com.my.
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