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IILM Successfully Conducts First US$500m Sukuk Auction for 2019

 Kuala Lumpur – The International Islamic Liquidity Management Corporation (IILM) conducted its first auction for 2019 on 23 January of a total US$500 million short-term Sukuk in two different series of 1-month tenor and 2-month tenors.

The IILM Sukuk, which are rated A-1 by Standard & Poor’s Rating Services, were reissued as a US$200 million tranche with a 1-month tenor  priced at a profit rate of  2.75 per annum; and a US$300 million tranche with a 2-month tenor priced at a profit rate of 2.83 per annum.

According to the IILM, this is the first issuance of 1-month tenor Sukuk since the IILM commenced its issuances in August 2013. This latest issuance was “well supported” with strong demand for both series of the IILM Sukuk with a bid to cover ratio of 277 per cent and 369% per cent for the 1-month and 2-month tenors respectively. Purchases by Islamic Primary Dealers (PDs) in the primary auction amounted to 100 per cent and 52 per cent for the 1-month and 2-month Sukūk respectively.

In terms of geographical distribution, Asia-based PDs were allocated 35 per cent of both the 1-month and 2-month Sukuk whereas GCC-based PDs were allocated 65 per cent and 55 per cent of the 1-month and 2-month Sukuk respectively. Some 10 per cent of the 2-month Sukuk were allocated to others. According to IILM, Abu Dhabi Islamic Bank, Al Baraka Turk Participation Bank, Barwa Bank (Qatar), Boubyan Bank, CIMB Islamic Bank Berhad, First Abu Dhabi Bank, Kuwait Finance House, Macquarie Bank, Maybank Islamic Berhad, Qatar Islamic Bank and Standard Chartered Bank were the primary dealers that participated in the US$500 million Sukuk auction under the competitive bidding of the Bloomberg AUPD Platform.

The International Islamic Liquidity Management Corporation (IILM) is an international organisation established on 25 October 2010 by central banks, monetary authorities and multilateral organisations to develop and issue short-term Sharia’a-compliant financial instruments to facilitate effective cross-border liquidity management for institutions that offer Islamic financial services.


Pakistan Government Approves Rs200 billion Sukuk To Ease Public Debt in the Power Generation Sector

Karachi – In a meeting in January 2019, the Economic Coordination Committee (ECC) of the Pakistan Cabinet, chaired by Finance Minister Asad Umar and attended also by the Federal Minister for Power, Omar Ayub Khan, approved the launch of a Rs200 billion (USD1.434bn) Sukuk, primarily to help clear part of mounting circular debt in the country’s power generation sector.

In a statement, the ECC stressed that after “detailed discussion, the Committee has approved the ministry to proceed with the raising of syndicated Islamic term finance facility of Rs200 billion for which term sheet had already been received from a consortium of Islamic banks.” The lead manager for the issuance is Meezan Bank.

Finance Minister Asad Umar assured the full support of the Government of Pakistan for the imminent launch of the Sukuk, which aims to generate sufficient finances to ease out liquidity of the power sector. According to the Ministry of Power, total circular debt in the sector stood at Rs1.614 trillion at the end of 2018.


DIB Pakistan Raises Rs3bn Through ATI Mudarabah Sukuk Issuance

Karachi – The Pakistani subsidiary of Dubai Islamic Bank (DIB), Dubai Islamic Bank Pakistan Limited (DIBPL) raised Rs.3 billion (US$21.5 million) through an Additional Tier 1 Mudarabah Sukuk issuance in January 2019.

The Sukuk, said the bank in a statement, is perpetual and has a Call Option exercisable on or after 5 years, subject to prior approval of the State Bank of Pakistan, the central bank.  The issuance was priced at a profit rate of 175 basis points per annum, over 3 Month KIBOR (Karachi Inter Bank Offered Rate) payable monthly.

The demand for the Sukuk certificates was strong with the issuance oversubscribed, and the order book closing at an issue size of Rs.3.12 Billion, reflecting also confidence by the investors in DIBPL and DIB Group credit risk. The issuance received interest from a diverse range of institutional investors including Islamic banks, conventional banks and their Islamic banking windows, corporate entities, development financial institutions, and insurance/Takaful companies. In total, 25 institutional investors participated in the issue.

“The Additional Tier 1 Sukuk raised will help maintain our competitive edge as one of the best performing banks in the financial industry whilst complying with regulatory requirements,” said Junaid Ahmed, Chief Executive Officer of DIBPL.

The local JCR-VIS Credit Rating Company Limited (JCR-VIS) assigned a rating of ‘A’ (Single-A) to DIBPL’s Basel III compliant Additional Tier-1 Sukuk with a ‘stable’ outlook.


SASCO Signs SR150m Islamic Credit Facility Agreement with Al-Jazirah Bank

Jeddah – Saudi Automotive Services Company (SASCO) completed the signing of a new SR150 million (USD40m) Shariah-compliant bank facility agreement with Al-Jazirah Bank in January2019.

The facility agreement, said SASCO in a disclosure to the Saudi Arabian Stock Exchange (Tadawul), comprised a long-term facility amounting to SR100 million, a short-term financing totalling SR5 million and letters of guarantee amounting to SR45 million.

The Short-term financing has a tenor of 30 days and the long-term financing a duration of 7 years from the date of withdrawal, with a grace period of 2 years.

According to SASCO, the proceeds from the facilities will be used to “finance buying new locations, building new fuel stations and developing the existing network of stations as well as financing working capital requirements.”


CBK Issues Regular Monthly ‘Bonds with Tawarruq’ Tranches Totaling KD920m

Kuwait City – The Central Bank of Kuwait (CBK) issued four tranches of its regular monthly “CBK bonds and related Tawarruq” totalling KD920 million (US$3,034.16 million) in January 2019.  These comprised a KD240 million (US$791.52 million) issuance on 5 January 2019 with a tenor of 3 months and a rate of return of 3.0 per cent; a KD240 million (US$791.52 million) issuance on 8 January 2019 with a tenor of 6 months and a rate of return of 3.125 per cent; a KD240 million (US$791.52 million) issuance on 22 January 2019 priced at a rate of return of 3.00 per cent over a 3 months tenor; and a KD200 million (US$659.6 million) issuance on 29 January 2019 priced at a rate of return of 3.00per cent over a 3 months tenor.


ICD Extends Debut US$20m Murabaha Facility to Bangladeshi NBFI to boost SME Sector

 Dhaka  – The Islamic Corporation for the Development of the Private Sector (ICD), the private sector arm of Islamic Development Bank (IDB) Group, signed a Murabaha facility totalling US$20 Million with LankaBangla Finance Limited (LBFL) to support the growth and productivity of SMEs in Bangladesh.

Green Delta Capital Limited, who assumed the role of lead advisor, were instrumental in the successful conclusion of this transaction, and will continue to provide expertise in their capacity as a Security Agent.

This is the first time in Bangladesh that a non-bank financial institution has sought foreign funds to finance the country’s growing SME sector, signifying a landmark deal for the LBFL as well as for the country.

At the signing ceremony, Ayman Amin Sejiny, CEO & General Manager of ICD stressed that “SMEs have affirmed their position as a key force for an economy’s development, and ICD is proud to play a role in extending financial support to SMEs in Bangladesh. As a multilateral development institution, our aim is to enhance the prospects for more resilient and inclusive growth in our member countries through financial inclusion and the creation of sustainable employment opportunities. As we believe in LangkaBangla Finance Limited’s mission, we look forward to a long-standing partnership with them.”

According to Khwaja Shahriar, Managing Director of LBFL “the facility will help Bangladeshi SMEs gain access to additional financing to capitalise on more business opportunities and to meet their working capital needs. Developing vibrant and healthy SMEs are integral to Bangladesh’s economic transformation process and we remained committed to helping them access credit resources and financial services.”


IsDB Approves US$81.06m of Financing in West Africa to Support Rice Import Substitution Programme

Dakar – The Islamic Development Bank (IsDB) has approved financing for several West African countries in January 2019 as part of its effort to help these member countries achieve self-sufficiency in food production, alleviate poverty and create employment for youth, women and build the capacity of farmers.

The funding was approved by the President of IsDB Group, Dr. Bandar Hajjar, during his tour of West African member countries in January. In Niger, the ISDB approved a US$15.26 million financing facility towards financing the Rice Value Chain Programme, which is an ambitious project launched by the IsDB and incorporating the participation of 10 countries in Sub-Saharan Africa including Benin, Burkina Faso, Cote D’Ivoire, Guinea, Gambia, Mali, Niger, Sierra Leone, Senegal and Sudan.

According to the IsDB, the Rice Value Chain Project is very important for Niger, because agriculture is the major sector of the economy constituting 40 per cent of GDP. Some 80 per cent of the population in Niger earn their livelihood through agriculture. Upon completion, the project has the potential to reduce current annual imports of 492,000 tons of rice that is costing the country US$214 million by 30 per cent.

The IsDB has similarly approved US$15.5 million for Guinea, US$30 million for Senegal, and US$20.3 million for Sierra Leone under the Regional Rice Value Chain Development Project, bringing the total allocation for the project in January 2019 to US$81.06 million.

The Rice Value Chain Programme is in line with the new business model of IsDB introduced by Dr. Hajjar through the President’s 5-Year programme (P5P) which views development intervention holistically by engaging the private sector, research institutions and non-governmental organisations.

At the same time, the IsDB has also contributed US$60 million to the National Programme for Islamic Microfinance in Senegal aimed at providing support for at least 50,000 microentrepreneurs, and create 25,000 new jobs.

The objective of the project, according to the IsDB, is to contribute to Senegal’s socio-economic development through the financial inclusion of small and micro-entrepreneurs, generating more jobs, increase economic activity and improve livelihoods, focusing on value chains of agriculture and services.

More specifically, the project is expected to promote financial inclusion among the disadvantaged communities and increase its uptake by 3 per cent.

The total cost of the project is estimated at US$82 million. IsDB’s contribution to project financing is US$60.3 million, including US$10.3 million for the Government of Senegal and US$50 million for the project’s Microfinance Institutions (MFIs).


CBB Issues Regular Tranches of Short-term Sukuk Al Salam and Sukuk Al-Ijarah

Manama – The Central Bank of Bahrain (CBB) issued its regular monthly BD43 million Sukuk Al-Salam Islamic Securities on 14 January 2019, which carry a maturity of 91 days, and were fully subscribed at the auction.

The expected return on the issue, which began on 16 January 2019 and matures on 17 April 2019, is 4.24 per cent compared to 4.27 per cent for the previous issue on 19 December 2018.

The CBB also issued its monthly short-term Islamic leasing certificates, Sukuk Al-Ijarah, totaling BD26 million on 8 January 2019.  They were 100 per cent subscribed by local banks and institutions and carry a maturity of 182 days.  The expected return on the issue, which began on 10 January 2019 and matures on 11 July 2019, is 4.40 per cent, compared to 4.45 per cent for the previous issue on 13 December 2018.

Both the Bai Salam securities and the leasing certificates are issued by the CBB on behalf of the Government of Bahrain.

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