News in Brief

ITFC Approves €140m Murabaha/Wakala Financing for Sustainable Energy and Groundnut Sectors in Senegal

Jeddah – The International Islamic Trade Finance Corporation (ITFC), the trade fund of the Islamic Development Bank (IsDB) Group, approved an €100 million Murabaha financing to the state-owned (Senegal National Power Company (SENELEC) in November 2021. The company’s strategic mandate is to ensure the production, transmission, and distribution of electricity in Senegal.

The facility will cover almost 20% of SENELEC’s financing needs to purchase refined petroleum products, directly impacting the production, transmission, and distribution of electricity throughout the country. The facility is in support of the Senegalese Government’s efforts to ensure a steady availability of electricity and provide the required energy for the development of economic sectors while contributing to the achievement of UN SDG 7 “Affordable Energy” and SDG 8 “Decent work and economic growth.”

According to Hani Salem Sonbol, ITFC CEO, “the Corporation subscribes to the sustainable development goals and avails itself to support Member-Countries achieve them. We believe access to electricity is crucial for individuals and businesses especially for a post-covid global economic recovery, and we see this new financing made available to SENELEC as our contribution to securing the provision of such a crucial need. We have had a very good partnership with Senegal since our inception and we look forward to supporting the country on its quest for economic growth and development.”

This €100 million Murabaha financing, added ITFC, will help meet the growing electricity demand, improve the reliability of power supply, reduce losses, and expand access to previously unserved communities.

In a further facility in November 2021, ITFC also signed a €40 million Wakalah Agreement with the Senegal National Groundnut Company (SONACOS). According to SONACOS CEO Modou Diagne Fada, “SONACOS’ partnership with ITFC is crucial for us. ITFC is a strategic ally and their understanding of the agricultural and African realities make it easier to work with them. This new financing facility will enable us to hit the ground running and provided the needed tools for our groundnut farmers to meet our targets for this coming season and create more value in the entire agricultural value chain.”

ITFC COO, Nazeem Noordali stressed that the Corporation’s commitment to supporting the agricultural sector is for the long-term. “We believe in the growth of the of the sector in sub-Saharan Africa and are ready to support key actors such as SONACOS on projects that bring in financial value but directly impact farming and rural communities as well. That way, we are not only supporting the recovery of the national and regional economy, but we are also creating and sustaining jobs and empowering farmers,” he added.


Al Rajhi Bank Arranges a SAR900m (US$239.9m) Long-term Murabaha Facility for Dallah Healthcare Company

Jeddah – Saudi Arabia’s Al Rajhi Bank extended a SAR900 million (US$239.90 million) long-term Murabaha financing facility to Dallah Healthcare Company (DHC) on 24 October 2021.

The proceeds from the 10-year facility, said Al Rajhi Bank in a disclosure to the Saudi Stock Exchange (Tadawul), will be used by DHC to support the company’s future acquisition and expansion strategy. The facility is guaranteed against a promissory note from DHC to the benefit of Al Rajhi Bank for SAR886 million.

Another Saudi corporate – Al Babtain Power and Telecommunication Company – signed a medium-term Murabaha financing agreement in November 2021 with Saudi Fransi Bank. The 5-year facility is guaranteed by Al Babtain Order Notes with a total value of SAR309 million.

The proceeds from the facility, said Saudi Fransi Bank in a disclosure to the Saudi Stock Exchange (Tadawul), will be used to restructure a part of existing short-term finance facilities and convert them into medium- term finance, which will increase the necessary cash flow to finance the company’s balance sheet requirements.


ICIEC and Japan’s NEXI Sign Landmark MoU to Provide Co-Insurance and Reinsurance to Support Greenfield Projects in Member Countries in the Middle East, Central Asia and Africa

Jeddah – The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), the export credit and investment insurance agency of the Islamic Development Bank (IsDB) Group, signed a landmark Memorandum of Understanding (MoU) with Nippon Export and Investment Insurance (NEXI), the Export Credit Agency (ECA) of Japan.

The MoU was signed virtually by Oussama KAISSI, Chief Executive Officer of ICIEC, and Atsuo Kuroda, Chairman and CEO of NEXI on 30 November 2021, with the two entities expressing their willingness to strengthen and further expand their existing cooperation.  

ICIEC and NEXI are already cooperating in a reinsurance framework to cover projects in ICIEC member countries. This new agreement follows the signing of an MoU on 27th August 2019 for ‘Accelerating Trade and Investments Targeting Africa by Japanese Companies’ between the two parties.

Under the new MoU, ICIEC and NEXI plan to strengthen and expand the strategic partnership in mutually significant greenfield projects, conforming to ICIEC’s mandate and NEXI’s strategy. The two parties are particularly interested in jointly supporting greenfield projects in the Middle East, Central Asia and African countries.

This new cooperation may include the provision of Co-Insurance and Reinsurance. The aim is also to leverage ICIEC’s extensive local knowledge and networking in member countries in Asia, Sub-Saharan Africa (SSA) and the MENA region. In this respect, and in particular for greenfield projects, ICIEC may assist NEXI in its due diligence processes, including on-site due diligence.

“This new MoU,” says Oussama Kaissi, CEO of ICIEC, “further consolidates our long-standing and growing partnership with NEXI in supporting bankable projects and inward Foreign Direct Investment (FDI) into our member countries in the MENA and SSA regions. Through our respective suites of de-risking solutions, we hope to boost the involvement of public-private partnerships in much-needed development and infrastructure projects in the mutually targeted countries in the Middle East, Central Asia and African countries”.

“We plan to cooperate in developing the business environment to facilitate financing proposals from Japanese companies through the active underwriting of projects and the provision of reinsurance facilities. ICIEC has a long history of operations in the organization of Islamic Cooperation (OIC) member countries. Japanese companies wish to expand their presence in the Middle East, Central Asia and African countries. This occasion represents a welcome opportunity to capitalize on our mutual strengths to carry out our core mandates of helping countries and the lives and livelihoods of their citizens.”

Atsuo Kuroda, Chairman and CEO of NEXI, commented at the virtual signing of the MoU: “Since signing the previous MOU in August 2019, ICIEC and NEXI have been closely working together to explore potential areas of cooperation. In that sense, the reinsurance framework we have established is the first major accomplishment that will solidify the two institutions’ further cooperation. Acknowledging that there are many possible forms of cooperation other than reinsurance, the purpose of the new MOU is not only to further strengthen the relationship between ICIEC and NEXI but to take our cooperation to a whole new level, which the next goal is to collaborate in greenfield projects that are significant for ICIEC member countries and Japan. It is expected of such greenfield projects to bring about many positive impacts, such as assisting countries to recover from the COVID-19 pandemic as well as open doors for significant economic development.”


ICD/KFH Capital Arrange US$75m Syndicated Secured Financing for Kuwait-based Islamic Aircraft Leasing Firm, ALAFCO

Jeddah – The Islamic Corporation for the Development of the Private Sector (ICD), the private sector funding arm of the Islamic Development Bank (IsDB) Group, arranged a four-year syndicated secured US$75 million financing in October 2021for Kuwait-based Aviation Lease and Finance Company (ALAFCO). The transaction was arranged by KFH Capital.

ALAFCO is a leading Islamic aircraft leasing company listed on the Kuwait Stock Exchange and has major institutional shareholders including Kuwait Finance House (KFH), Gulf Investment Corporation (GIC) and Kuwait Airways Corporation (KAC).

ALAFCO’s portfolio consists of 79 Airbus and Boeing aircraft, leased to 23 airlines in 15 countries across the Americas, Africa, Asia-Pacific, Europe, and the Middle East. ALAFCO’s remaining order book comprises of 68 new technology aircraft from Airbus and Boeing with deliveries scheduled to take place between 2022 and 2028.

ICD is underwriting US$50 million as lead financier in the transaction. According to the Corporation, “while the aviation sector plays a crucial role in global connectivity and mobility as well as economic growth, it has been one of the hardest hit sectors during the pandemic. ICD’s financing will strengthen the operations of ALAFCO and help it to be well prepared as economic activities and travel picks up.”

Ayman Sejiny, the CEO of ICD, stressed that ICD “was pleased to support ALAFCO in its efforts as a leading player in the aircraft leasing market following Islamic finance principles. ICD fosters sustainable economic growth in its 55 member countries by financing private sector investments, mobilizing capital from the international financial markets, and providing advisory services to businesses and governments.”

Adel Ahmad Albanwan, ALAFCO CEO, added that the transaction “demonstrates the confidence ICD has in ALAFCO’s business model, its long-term sustainability and the outlook of the aviation sector.”

Malaysia’s Mortgage Securitiser Cagamas Berhad Sustains its Sukuk Offering with RM1.945bn (US$462m) Sukuk issuances in November 2021

Kuala Lumpur – Cagamas Berhad, the National Mortgage Corporation of Malaysia, one of the most prolific issuers of Sukuk, closed aggregate hybrid Sukuk and conventional bond issuances totalling RM4 billion (US$948.43 million) on 30 November 2021.

The issuances comprise RM345 million 3-month Islamic Commercial Papers (ICPs), RM400 million 3-month Commercial Papers (CCPs), RM100 million multi-tenured ASEAN Sustainability, RM380 million multi-tenured Conventional Medium Term Notes, RM1.6 billion multi-tenured Islamic Medium Term Notes (IMTNs) as well as US$268 million 1- & 2-year Fixed Rate Euro Medium Term Notes (EMTN) through its wholly-owned subsidiary, Cagamas Global Plc. As such, the total Sukuk component is RM1.945 billion.

Proceeds from the issuances will be used to fund the purchase of eligible sustainability assets, housing finance loans and Islamic home financing from the financial system.

This transaction follows Cagamas’s RM300 million (US$72.21 million) 3-month Islamic Commercial Papers (ICPs) issuance on 13 October 2021. All the above issuances were issued under Cagamas’s existing RM60 billion Islamic/Conventional Medium Term Notes Programme.

“We are pleased with the successful conclusion of the Company’s issuances from both domestic and international market despite the global headline risks on inflation and the growing expectation of rate hike in the coming months,” said Cagamas President and Chief Executive Officer, Datuk Chung Chee Leong. “The Company’s continuous efforts to tap into the foreign currency markets while maintaining its presence in the domestic market, contributed to the successful conclusion of the transactions, underlining its continued capability to provide competitive funding to onshore financial institutions. The USD issuances also mark the Company’s second foreign currency pricing exercise for the year and brings the total foreign currency issued year-to-date to an equivalent of RM1.9 billion or 11% of all issuances concluded by Cagamas year-to-date,” added Datuk Chung.

The transactions bring the Company’s year-to-date issuance amount to RM17.2 billion, the highest since 2008. The USD denominated bonds issued via the Company’s wholly- owned subsidiary – Cagamas Global P.LC. – are fully and unconditionally guaranteed by Cagamas while the Ringgit issuances are unsecured obligations of the Company, ranking pari passu with all other existing unsecured obligations of the Company.

Cagamas plays a major role in Sukuk origination and continues to be an innovator in the mortgage finance and securitisation market. The Cagamas paperswill be listed and traded under the Scripless Securities Trading System of Bursa Malaysia.

Cagamas’ corporate bonds and Sukuk continue to be assigned the highest ratings of AAA and P1 by RAM Rating Services Berhad and AAA/AAAIS and MARC-1/MARC-1IS by Malaysian Rating Corporation Berhad, denoting its strong credit quality. Cagamas is also well regarded internationally and has been assigned local and foreign currency long-term issuer ratings of A3 by Moody’s Investors Service Inc. that are in line with Malaysian sovereign ratings.

The Cagamas model is well regarded by the World Bank as the most successful secondary mortgage liquidity facility. Cagamas is the second largest issuer of debt instruments after the Government of Malaysia and the largest issuer of AAA corporate bonds and Sukuk in the market. Since incorporation in 1986, Cagamas has cumulatively issued circa RM320.1 billion worth of corporate bonds and Sukuk


IILM Continues Tenth and Eleventh Consecutive Monthly Short-Term Sukuk Issuance with an aggregate US$2.46bn Three-Tranche Offerings inOctober/November 2021 as Year-to-Date Aggregate Tops US$13.02bn

Kuala Lumpur – The International Islamic Liquidity Management Corporation (IILM) continued its short-term Sukuk issuance calendar with its tenth and eleventh monthly auctions in October and November 2021 by successfully reissuing a total of US$1.15 billion and US$1.31 billion short-term A-1-rated Sukuk across three tenors – 1 month, 3 months and 6 months. This follows the reissuing of similar Sukuk totalling US$1.2 billion in September 2021.

All the above transactions come under IILM’s US$4.0 billion short-term issuance programme. The Corporation held an auction on 11 October 2021 for the three series of re-issuances totalling US$1.15 billion, priced by the market as follows:

  1. US$450 million of 1-month tenor certificates at 0.20%
  2. US$350 million of 3-month tenor certificates at 0.25%
  3. US$350 million of 6-month tenor certificates at 0.35%

Dr Umar Oseni, Chief Executive Officer of the IILM, stressed “that going into the final quarter of the year, the IILM’s Sukuk programme continues to receive overwhelming demand from a diverse range of investors. The IILM’s Islamic papers remain a go-to solution for investors to place short-term cash in the context of potential upcoming shift of global monetary conditions and investors’ anticipation of rising rates.

“Today’s auction reflected strong demand towards the 1-month tenor as investors look to park cash on shorter tenor, due to the uncertainty surrounding the Federal Reserve tapering decision. For the remaining auctions for the rest of the year, we are confident of investors’ commitment to our programme and will continue to work towards meeting their liquidity needs,” Dr Umar added.

The Corporation held a second auction on 15 November 2021 for the three series of re-issuances totalling US$1.31 billion, priced by the market as follows:

  1. US$400 million of 1-month tenor certificates at 0.18%
  2. US$560 million of 3-month tenor certificates at 0.26%
  3. US$350 million of 6-month tenor certificates at 0.36%

In its eleventh auction for 2021, the IILM’s Sukuk reissuance witnessed a competitive tender among Islamic Primary Dealers and investors across the GCC markets as well as Asia, with a strong orderbook in excess of US$1.79 billion, representing an average oversubscription rate of 1.37 times.

According to IILM CEO Umar Oseni, the reissuance auction in November “saw a sustained demand for the 1-month and 3-month tenors of the IILM’s Islamic papers, given the current appetite of investors for shorter tenors in anticipation of an impending rate hike and tapering of asset purchase by the Federal Reserve. “While the IILM’s issuance this month appears to be quite sizeable at the tail end of the year, on the back of the markets’ intensifying expectations for a tighter policy by the Fed, we are pleased that the issuance for all tenors were fully subscribed at competitive all-in profit rates. The IILM continues to fulfil the liquidity needs of the Islamic markets with adequate flexibility.”

In light of the reissuances, the IILM has achieved year-to-date cumulative issuances totalling US$13.02 billion through 33 Sukuk series. The IILM will continue to reissue its short-term liquidity instruments monthly as scheduled in its issuance calendar. The IILM is a regular issuer of short-term Sukuk across varying tenors and amounts to cater to the liquidity needs of institutions offering Islamic financial services.

The IILM’s short-term Sukuk programme is rated “A-1” by S&P with current outstanding issuance size amounting to US$3.51 billion. According to the IILM, the primary dealers that participated in the auction conducted under the competitive bidding of the Bloomberg AUPD Platform included Abu Dhabi Islamic Bank; Al Baraka Turk Participation Bank; Barwa Bank; 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.


Standard Chartered Saadiq Launches US$100m Islamic Finance Programme in Collaboration with Malaysia’s HDC to Support SMEs and Corporates in the Global Halal Ecosystem

Dubai – Standard Chartered ‘Saadiq’ in collaboration with the Malaysian Halal Development Corporation (HDC) launched a US$100 million Islamic financial programme in November 2021 dedicated to supporting SMEs, corporates and multinationals across Asia, the Middle East and Africa with a focus on some of the key halal markets such as the UAE, Saudi Arabia, Malaysia, Bahrain, Bangladesh and Pakistan.

The programme, which was announced during the Halal Week at the UAE Expo in Dubai, is part of Saadiq’s Halal 360 proposition and aims at expanding the Halal eco-system across Asia, Africa, and the Middle East. HDC, an agency under the Malaysian Ministry of International Trade and Industry (MITI), is the world’s first Government-backed halal industry development corporation.

According to Khurram Hilal, CEO of Islamic Banking and Head of Group Islamic Products at Standard Chartered, “the Halal economy is projected to witness exponential growth and as a leading player in Islamic banking, we are honoured to be supporting Halal businesses across our global footprint. We are leveraging our network in high growth markets to help businesses succeed by offering them innovative financial solutions; thereby, contributing to the overall growth of the Halal trade ecosystem.”

Hairol Ariffein Sahari, CEO of HDC, is confident that “the funding will help Malaysian companies to penetrate the Middle East, Asia and other global markets, build self-reliance and be more competitive domestically with the ultimate goal to become Halal Malaysia Champions.”

HDC spearheads the development of Malaysia’s integrated and comprehensive halal ecosystem and infrastructure to position Malaysia as the most competitive country leading the global halal industry. Established on 18 September 2006, HDC is also known as the central coordinator that promotes participation and facilitates the growth of industry players in the development of Malaysia’s Halal ecosystem. 


Saudi Arabian Amiantit Co. Reschedules SAR525.3m Bay Ajel Financing Facility with Alinma Bank

Jeddah – Saudi Arabian Amiantit Co. has rescheduled its SAR525.3 million Bay Ajel financing facility with the local Alinma Bank on 30 October 2021.

The restructured agreement comprises: i) a SAR367.7 million non-revolving Bay Ajel facility with a tenor of 10 years inclusive of a 2 years grace period, with semi-annual profit payments and principal repayments; and ii) a SAR 157.6 million revolving Bay Ajel facility, to finance working capital requirements.

In a disclosure to the Saudi Stock Exchange (Tadawul), the Saudi Arabian Amiantit Co. said the reason for the facility rescheduling is “to improve and arrange the company’s cashflow and to enhance the operations of the company… and reduce the annual financial charges from SIBOR +2.75% to be SIBOR +1.5%.”

The rescheduled facility has a Corporate Guarantee for the full amount extended by Saudi Arabian Amiantit Co.

Indonesian Government Raises IDR9 Trillion (US$630m) Through Two Rupiah-denominated Sukuk Auctions in October/November 2021 as Aggregate Funds Raised in January-November 2021 Total IDR182.12 Trillion (US$12.7bn)

Jakarta – The Government of Indonesia continued to consolidate its role as one of the most proactive repeat issuers of sovereign domestic Sukuk in the market through two auctions in mid-October and early November 2021.

The Department of Islamic Financing at the Directorate General of Budget Financing and Risk Management, Ministry of Finance of Indonesia, raised a total IDR9 trillion (US$630 million) in the period, with the aggregate total of domestic sovereign Sukuk raised between January-November 2021 amounting to IDR182.12 trillion.

The Government of Indonesia is a prolific issuer of domestic Sukuk and demand from local institutional investors is robust. The total bids for the two auctions for instance amounted to IDR102.117 trillion.

The October/November 2021 issuances comprised four auctions of Sovereign Shariah Securities (SSS) or Sukuk Negara through the auction system of Bank of Indonesia.

The auction held on 19 October 2021 of Sovereign Shariah Securities (SSS) raised IDR5 trillion comprising five tranches with tenors of 6 months, 2.5 years, 5 years, 13 years and 25 years. The tranches were priced at a coupon rate at Discount 4%, 4.875%, 6.375% and 7.75% respectively. Total incoming bids for the auction amounted to IDR53.42 trillion.

The auction held on 2 November 2021 of Sovereign Shariah Securities (SSS) raised IDR4 trillion comprising five tranches with tenors at of 6 months, 3 years, 5 years, 13 years and 25 years. The tranches were priced at a coupon rate at discount, 4%, 4.875%, 6.375% and 7.75% respectively. Total incoming bids for the auction amounted to IDR48.697 trillion.

Securities Commission Malaysia Prioritises Islamic Fintech and Regtech to Further Develop the Country’s Digital Footprint in the Islamic Capital Market

Kuala Lumpur – “Fintech could be a key enabler in re-building the Malaysian economy as the country recovers from the pandemic. Technology is in fact one of the main thrusts of Malaysia’s Capital Market Masterplan 3, where we envision greater use of digital capability to facilitate fundraising for companies of all sizes while encouraging market innovation and financial inclusion,” emphasised Datuk Syed Zaid Albar, Chairman of The Securities Commission Malaysia (SC) at the regulator’s flagship Annual Fintech Conference at end October 2021.

The focus this year was on Islamic Fintech and Regtech. “We believe that cultivating Islamic finance digital capabilities is essential to propel the growth of Sharia’a investing and attract new participants to Malaysia’s Islamic capital market,” he added.

This year, participants also had the opportunity to experience first-hand the FIKRA

Islamic Fintech Accelerator Programme (FIKRA), launched in May by the SC and the United Nations Capital Development Fund (UNCDF). FIKRA “aims to identify and scale relevant and innovative Islamic Fintech solutions that can help address three main challenge areas, namely, new ICM offerings, accessibility and social finance integration.”

Datuk Albar stressed that the EC would seek to drive greater adoption of digital capability to enhance capital formation efficiencies and increase investor participation in the capital market. “We have seen how small businesses have been badly impacted by the global response to the pandemic. Last year, Small and Medium Enterprises’ GDP contracted 7.3%, sharper than the decline in Malaysia’s GDP and non-SMEs GDP which shrank by 5.6% and 4.6% respectively,” he stressed.

During the pandemic, the SC noted encouraging developments where peer-to-peer (P2P) financing and equity crowdfunding (ECF) platforms continued to meet and support the funding needs of Micro, Small and Medium Enterprises (MSMEs).

There are currently 21 ECF and P2P platforms registered with the SC, which have collectively raised more than RM2.2 billion for close to 4,000 MSMEs since their inception. Despite an initial decline in fundraising activities due to the movement control order in the first quarter of 2020, the SC stated that these alternative platforms had assisted MSMEs in raising more than RM1.3 billion since April last year.

In the first half of 2021 alone, a further RM625 million was raised through ECF and P2P, an increase of 151% and 220% respectively, compared to the same period in 2020. ECF and P2P attracted young investors with nearly 60% of participants aged below 35.

Digital asset exchanges in Malaysia also continue to thrive, with over 300,000 new accounts opened this year to-date. Since its introduction in 2019, the volume of digital assets traded has surpassed a billion, with values in excess of RM16 billion as at September 2021. New digital investment management (DIM) entrants have also contributed to the growth of assets under management in the capital market. As of July 2021, the eight licensed DIM operators have seen a 90% jump in new account openings compared to 2020 with nearly 75% of account holders under the age of 35.

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