NEWS in BRIEF

Emirates NBD Group Commits to Accelerate the Achievement of UN Sustainable Development Goal SDG5 on Gender Equality and Representation of Women in Corporate Leadership Roles

Dubai – As part of its ongoing commitment to promote gender equality and representation of women in corporate leadership roles, Emirates NBD Group, a leading banking group in the MENAT (Middle East, North Africa and Türkiye) region, has joined a pledge in June 2023 to accelerate the achievement of the UN Sustainable Development Goal 5 (Achieve gender equality and empower all women and girls).

Emirates NBD Group owns 99.9% of Emirates Islamic, the third largest Islamic bank in the UAE in terms of assets after Dubai Islamic Bank and Abu Dhabi Islamic Bank. Emirates NBD Group is indirectly owned by the Government of Dubai (via ICD, the Investment Corporation of Dubai).

The Group is among the newest cohort of eight leading local and multinational companies in the UAE to sign the SDG 5 Pledge at a ceremony hosted by the UAE Gender Balance Council (GBC). The Pledge, according to Emirates NBD, is aligned to the UAE government’s focus on increasing female equity and representation across public and private sector workplaces.

As a pledge member, Emirates NBD Group pledges to work closely with the UAE GBC to align with UAE’s vision to achieve the 17 UN SDGs specifically Goal Number 5 which aims at achieving gender equality and empowering women and “raising awareness on the importance of ensuring women’s full and effective participation and equal opportunities at all levels of decision-making.”

Emirates NBD Group follows Kuwait Finance House (KFH) which signed the first Women’s Empowerment Principles agreement by an Islamic bank with the United Nations Group Human Resources Department on 9th March 2023. That move similarly is part of KFH’s commitment to implement the UN Sustainable Development Goals (SDGs) Agenda 2030, which KFH stressed are key drivers of business growth and sustainability, and as such essential to the growth of the Kuwait economy and societal progress.

Under the UAE and GBC pledge, each of the signatories is committed to taking key actions to strengthen gender balance in leadership positions, including ensuring equal pay and fair compensation practices; promoting gender equitable recruitment and promotion; reflecting gender balance ambitions through policies and programmes; and being transparent about progress through annual reporting to the to the UAE GBC.

Established in 2015, the UAE GBC is a federal entity responsible for developing and implementing the gender balance agenda in the emirate.

According to Shayne Nelson, Group CEO at Emirates NBD, the Group “was the first UAE banking group to publicly commit to female leadership targets last year, reflecting the importance of Diversity and Inclusion to us as a Group. Our signing the Pledge further cements our commitment towards bridging gender balance gaps and fostering a culture of equality and diversity.”

Similarly, Eman Abdulrazzaq, Group Chief Human Resource Officer at Emirates NBD, emphasised that “The SDG 5 Pledge is a visible testament to our efforts towards bridging gender balance gaps and achieving gender parity in decision-making positions. We are proud to have strong female representation on our workforce that remains well above the global benchmark for financial services. Emirates NBD’s Diversity and Inclusion agenda focuses on enabling and promoting an inclusive culture to build a pathway for women’s professional growth and development and we look forward to contributing positively to provide opportunities for women to grow, not just at an organizational level but also in the UAE.”

Emirates NBD supports females across the organization to reach their leadership potential through a range of internal and external programmes, emphasizing the critical data and soft skills now considered a prerequisite for leadership in a digital era. It also includes accelerated role opportunities, executive courses, and coaching and mentoring.

Multilateral Insurer ICIEC Signs US$300m of Policy Cover for Murabaha Trade Deals and Development Projects in Several Member States During IsDB Annual Meetings in Jeddah in May 2023

Jeddah The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), the Shariah-compliant multilateral insurer and member of the Islamic Development Bank (IsDB) Group, signed transactions amounting to an aggregate of US$300 million comprising several insurance policies covering trade deals and projects.

The agreements for the above policies were signed during the 2023 IsDB Group Annual Meetings held in Jeddah, Saudi Arabia, which concluded on 13th May and was convened under the theme of forging “Partnerships to Fend Off Crises.”

The transactions include:

  1. A US$42 million Facultative Reinsurance Agreement with Saudi EXIM Bank for a Documentary Credit Insurance Sub-Policy Limit in favour of Riyad Bank thus enabling coverage of LCs confirmed by Ryiad Bank for several Saudi commercial banks.
  2. An additional €36 million Non-Honouring Sovereign Financial Obligation (NHSFO) Insurance Policy with Standard Chartered Bank (UK) Ltd, Standard Chartered Bank (Hong Kong) Ltd and Société Générale, covering the financing of Government projects in Uganda. The €36 million is a top-up under the accordion mechanism of the Islamic financing of €146 million advanced by ICIEC to the Uganda Ministry of Finance The project is being financed by Standard Chartered Bank (Hong Kong) and Société Générale (as Participants) with Standard Chartered Bank UK (as Agent) in Murabaha format. The top-up, says ICIEC, provides comprehensive coverage to the financiers regarding the non-payment risks of the Republic of Uganda for the funding of infrastructure projects under the Development and Infrastructure Budget 2022 of Uganda related to several projects covering agriculture, climate action, education, healthcare, power infrastructure, transportation and water infrastructure.
  3. A US$25 million Contract Frustration Insurance Policy (STP-CF) with Boskalis Westminster Contracting Limited (BWCL) to cover the marine and dredging works for the Hudayriyat project in Abu Dhabi, UAE. ICIEC’s coverage is to insure the non-payment risk of the National Marine Dredging Company of Abu Dhabi arising from political and commercial risks.
  4. A US$15 million Documentary Credit Insurance Policy (DCIP) with the Saudi National Bank (SNB) which supports the headroom and capacity of SNB to provide lines of confirmation to various issuing banks in Saudi Arabia or in ICIEC member states for bilateral trade transactions. The DCIP is a comprehensive non-payment insurance policy against the default of issuing banks in honouring their obligations under an irrevocable Letter of Credit.
  5. A US$11 million Contract Frustration Insurance Policy (STP-CF) with Boskalis Westminster Contracting Limited (BWCL) to cover marine works for Bandar Al-Sayah and Danat Al-Sayah development projects in Bahrain. ICIEC’s coverage insures the non-payment risk of the project employer arising from political and commercial risks.
  6. A comprehensive non-payment insurance contract with the Islamic Corporation for the Development of the Private Sector (ICD), the private sector funding arm of the IsDB Group, whereby ICIEC will provide credit insurance cover through its Bank Master Policy (BMP) to ICD clients to cover the non-payment risk of trade-based obligors in IsDB Group member states. The first policy approval under the BMP of €10 million to cover ICD’s financing to Banque Malienne de Solidarite (Mali) was also signed.
  7. A US$4 million Facultative Reinsurance Agreement (FRA) with KAZAKHEXPORT Insurance Company JSC in support of covering the commercial risks related to the financial leasing of locomotives to Azerbaijan Railways.

A core feature of the Annual Meetings is the IsDB Group Private Sector Forum (PSF) which is widely attended by financial institutions, government agencies, corporates and insurers, concentrating on discussing ways inter alia of enhancing cooperation through the provision of credit and investment insurance, and guarantees, consistent with the needs of their development agendas and meeting the rising challenges of climate change, energy transition, food insecurity, health system inequality, the digital divide, attracting inward FDI and private sector capital, to help them achieve the UN 2030 SDG agenda and the Net Zero ambitions of the Paris Climate Agreement.

Oussama Kaissi, CEO of ICIEC, addressing the Forum, stressed the need for strong policy action coupled with pragmatic approaches to find common grounds to respond to shared challenges, especially through partnerships and collaboration among stakeholders. This should encapsulate overall priorities, including promoting Agriculture, Poverty Reduction, Food Security Green Finance supporting transition to clean energy.

“Food insecurity,” he emphasised, “is often a consequence of climate change. The energy transition is complex and costly. Private sector engagement is one of the main pillars of ICIEC’s strategy. It requires credit enhancement to help make projects bankable to investors. ICIEC is uniquely positioned to do this through its de-risking tools, sustainability policies and access to its member states’ national and subnational bodies, which engage with relevant climate action and food security projects and transactions, and sustainable tourism.”

Malaysia’s SME Bank Upsizes its Sustainability Sukuk Offering in May 2023 to RM1bn (US$220m) Following Robust Investor Demand

Kuala Lumpur – Malaysia’s SME Development Bank (SME Bank) successfully closed the issuance of its 5-year RM1 billion (US$220 million) Sustainability Sukuk Wakalah on 30th May 2023.

SME Bank initially aimed an issuance size of RM500 million (US$108.08 million), but due to strong demand from investors following its distribution under the book-building exercise with the order book exceeding well over RM1 billion, the Bank decided to upsize the offering to RM1.0 billion.

SME Bank’s Group President/Chief Executive Officer, Dr Aria Putera Ismail stressed that “Due to overwhelming demand from local and foreign financial institutions, fund management companies, Takaful/insurance firms, and Government-Linked Investment Companies, SME Bank has opted to upsize the total issuance amount to RM1.0 billion. This achievement demonstrates the confidence of investors and the wider financial community in SME Bank’s ability to drive sustainable SME sector growth. SME Bank Sustainability Sukuk was priced at a competitive profit rate of 4.05% per annum, amidst a challenging market environment.”

The Sukuk transaction was arranged RHB Investment Bank, AmInvestment Bank, CIMB Investment Bank, and Maybank Investment Bank Berhad, which also acted as Joint Lead Managers and Bookrunners.

The Sukuk was issued under SME Banks’ RM 3 billion (US$650 million) Sukuk Wakalah Programme. The proceeds from this Sukuk issuance will be exclusively utilised to finance projects aligned with environmental, social, and governance (ESG) considerations. This strategic focus on ESG projects not only contributes to sustainable development but also empowers SME Bank to offer innovative financing solutions tailored to the unique needs of small-and-medium-sized enterprises, added the Bank.

SME Bank’s Sukuk Wakalah programme has been assigned AAA ratings by the Malaysian Rating Corporation Bhd (MARC) and achieved the Gold Standard, the highest rating under MARC’s Sustainability Sukuk framework. These ratings highlight SME Bank’s strong creditworthiness and unwavering commitment to sustainable practices, explained SME Bank’s Head of Treasury, Mohd Nazri Abu Samah.

“MARC rating agency has reaffirmed its AAAIS/MARC-1IS ratings with a ‘Stable’ Outlook on SME Bank’s Islamic Medium-Term Notes (IMTN) Programme of up to RM3.0 billion and Islamic Commercial Papers (ICP) Programme of up to RM1.0 billion, with a combined aggregate limit in nominal value of up to RM3.0 billion. These ratings underscore SME Bank’s solid financial position and its ability to consistently deliver on its commitments,” he stressed.

SME Bank, a Development Financial Institution (DFI) wholly owned by the Ministry of Finance and regulated by Bank Negara Malaysia (BNM), has long been recognised as a key player in the development of SMEs in Malaysia. “With this successful issuance of the Sustainability Sukuk, SME Bank reaffirms its mission to empower SMEs, promote sustainable growth, and contribute to the nation’s economic prosperity,” added Mohd Nazri Abu Samah.

ITFC Signs Murabaha Trade Finance, Lines of Credit and LC Confirmation Facilities Totalling US$3.2bn with Member Country Counterparties During IsDB Annual Meetings in May 2023

 Jeddah – The International Islamic Trade Finance Corporation (ITFC), the trade fund of the IsDB Group, signed a spate of trade finance and framework deals with corporates and entities from member states totalling US$3.151 billion in May 2023. The transactions were signed during the 2023 IsDB Group Annual Meetings held in Jeddah during 10-13 May.

The agreements include:

  1. Several Framework Agreements with various Ministries of Finance to fund essential imports and projects in the energy, agriculture, industrial, healthcare and private sectors. These include a 5-year US$500 million Framework Agreement with the Ministry of Finance of Mali; a 3-year US$600 million Framework Agreement with the Ministry of Finance of Djibouti; a 3-year US$100 million Framework Agreement with the Ministry of Finance of Tajikistan; a 3-year US$900 million Framework Agreement with the Ministry of Finance of Burkina Faso; a US$250 million Framework Agreement with Togo, a 5-year US$250 million Framework Agreement with the Ministry of Planning & Development of Cote d’Ivoire; and a 3-year US$1 billion Framework Agreement with the Ministry of Finance of Nigeria.
  2. Several Murabaha financing facilities – a US$325 million Syndicated Murabaha facility for Afreximbank to support its US$4 billion UKAPFA (Ukraine Crisis Adjustment Trade Financing Programme for Africa), which seeks to assist its member countries mitigate the effect of higher commodity prices due to the conflict and to support the trade finance needs of the private sector and State-owned entities; a US$35 million facility for the National Water & Electricity Company (NAWEC) in The Gambia; a US$20 million facility for the Gambia National Petroleum Company (GNPC) for the import of refined petroleum products; a US$25 million Murabaha facility for Invest Finance Bank, Uzbekistan to support the import and pre-export financing needs of its private sector clients, particularly SMEs; a EUR20 million Murabaha facility for Bridge Bank Group Cote d’Ivoire (BBGCI) targeting the trade finance needs of private sector clients of the bank, with a particular focus on essential commodities such as petroleum products and staple food imports; a US$15 million Murabaha facility for Compagnie Camerounaise d’Aluminium (ALUCAM) to support the strategic development of the bauxite industry and securing ALUCAM’s supply of alumina and other raw materials to produce Aluminum; a US$10 million Murabaha facility for Jaiz Bank in Nigeria to address the trade finance needs of private sector clients in the agricultural commodity trade; the renewal of a US$15 million Murabaha facility in favour of Uzbek Industrial and Construction Bank, Uzbekistan to meet the Islamic trade finance needs of private sector clients of the bank, particularly the SMEs; a EUR25 million Murabaha facility for ECOWAS Bank for Investment and Development to meet the trade finance needs of private sector clients of the bank; and a US$15 million Murabaha facility for Hamkorbank in Uzbekistan to address the trade finance needs of the bank’s private sector clients with a focus on SMEs.
  3. Two Letters of Credit Confirmation (LCs) – one a EUR40 million LC Confirmation Facility to the Bank of Africa, Cote d’Ivoire to meet the trade financing needs of private sector clients of the bank; and the other US$10 million LC Confirmation Facility to Rabitabank, a new partner bank of ITFC in Azerbaijan, to cater to the unfunded trade finance requirements of Rabitabank’s SME clients.
  4. Three lines of financing – a US$10 million trade finance facility for Agrobank in Uzbekistan to meet the trade financing needs of SMEs operating in the food and agriculture sectors; an additional US$25 million Line of Financing to Orient Finans Bank in Uzbekistan to meet the trade finance needs of private sector clients of the bank; and a US$10 million Line of Financing for Qishloq Qurilish Bank in Uzbekistan to meet the trade finance needs of private sector clients with a focus on women entrepreneurs and SMEs in the food and agriculture sectors. 

Qatar Islamic Bank Boosts its Sustainability Credentials by Signing Up to the Equator Principles on Sustainability by Joining the Equator Principles Association

Doha – Qatar Islamic Bank (QIB), one of the leading Islamic banks in Qatar and the GCC, has become the first Qatari bank to adopt the Equator Principles on Sustainability by joining the Equator Principles Association (EP Association) on 12 June 2023. The EP Association is a globally recognized benchmark framework for determining, assessing, and managing environmental and social risk in bank financed projects.

“This important move,” according to the Bank, “asserts the bank’s commitment to sustainable banking practices, supporting sustainable development efforts, and aligning with the global community of the EP Association. Having the Qatar National Vision 2030 (QNV 2030) as the foundation of its business strategy, and in line with the United Nations (UN) Sustainable Development Goals (SDGs), QIB has a track record of promoting sustainable development.”

By becoming an Equator Principles Financial Institution (EPFI), QIB has updated its risk management framework to comply with the Equator Principles, further demonstrating its commitment to sustainable banking practices and sustainable development. This effort will enable the bank to monitor the exposure of new project finance and related requests to Environment, Social and Governance (ESG) based risks, while providing an opportunity to engage with its customers on mitigating any potential risks, resulting in an enhanced risk awareness among existing and prospective customers.

Bassel Gamal, QIB Group CEO, emphasised that “We recognize the important role the financial sector plays in promoting sustainability, and believe that incorporating ESG risk analysis is essential to mitigate climate risks and support responsible risk decision making. As the landscape of business continues to evolve with new trends driven by innovation and the need to adapt and mitigate climate risks, QIB is committed to embrace these trends and support long-term positive impact in the communities it serves. We are committed to sustainability in all our business activities, and becoming a signatory to the Equator Principles is a significant step forward in this regard.”

The Equator Principles (EPs) serve as a widely recognized framework for managing environmental and social risks in projects. This framework is adopted by financial institutions to determine, assess, and manage such risks, with the primary goal of establishing a minimum standard for due diligence and monitoring.

Through its ESG based risk management framework, the EPs support sustainable development efforts worldwide. These principles have gained widespread acceptance, with EPFIs covering a vast majority of international project finance debt in both developed and emerging markets. The adoption of the equator principles also finds profound interest among the investor community.

Malaysia DFI Bank Pembangunan Completes Strategic Merger with Nasional Financial Guarantee Insurer for the Issuance of Bonds and Sukuk Danajamin Nasional

Kuala Lumpur – Bank Pembangunan Malaysia Berhad (BPMB) Group, the national development bank owned by the Malaysian Ministry of Finance focused on financing sectors deemed strategic to national economic development, has completed its merger with Danajamin Nasional Berhad, the erstwhile national Financial Guarantee Insurer for the issuance of bonds and Sukuk.

The BPMB Group is regulated and supervised by Bank Negara Malaysia under the Development Financial Institution Act 2002. The merger finalised in April 2023 has been on the cards since 2021 with agreements signed between BPMB and Danajamin’s then-shareholders, Credit Guarantee Corporation Malaysia Berhad and Minister of Finance (Incorporated) for the 100% acquisition of the financial guarantee insurer.

Since then, the merged entities have been successfully integrated, culminating in the completion of the Business Transfer Scheme exercise in March 2023 concluding with the surrendering of Danajamin’s license to Bank Negara Malaysia. The integration included establishing a unified leadership team, redefining BPMB Group’s purpose, aspirations and core values, and harmonising processes and systems, as well as employee benefits.

The merger was part of the Government’s medium-term plan to strengthen and align the mandates of the country’s Development Financial Institutions (DFIs) to improve the national development finance ecosystem.

According to BPMB Group Chairman, Tan Sri Nazir Razak “The integration of BPMB and Danajamin is the first step towards a stronger and more streamlined development financial institution sector in Malaysia, better placed to support businesses and targeted economic sectors. BPMB stands ready to move forward with further mergers, at the Government’s direction.”

BPMB has been providing impact capital for national development since 1973. BPMB Group total assets reached RM26.1 billion as Q1 2022. Danajamin’s financial guarantees have assisted 44 issuances, with a total guarantee size of RM10.9 billion at its peak in FY2021/22. The total market impact of these deals, through risk-sharing collaboration with partner banks, stood at RM23.2 billion.      

UAE Securities and Commodities Authority (SCA), Exempts Issuers Wishing to List Green or Sustainability-linked Bonds or Sukuk in the Local Market from Registration Fees for the Year 2023

Dubai – The Board of Directors of the Securities and Commodities Authority (SCA), in its meeting on 6th June 2023 chaired by Mohamed Ali Al Shorafa, approved a proposal for the SCA to exempt companies wishing to list their green or sustainability-linked bonds or Sukuk in a local market from registration fees for the year 2023.

“The decision aims to highlight the actions taken by the UAE in accordance with a clear agenda to achieve the objectives of sustainable development on more than one level, especially with regard to sustainable economic growth,” stressed the SCA. It is also in line with the ambitions of the UAE to promote its sustainability agenda in 2023 – The Year of Sustainability – and beyond.

According to Dr. Sultan Al Jaber, Minister of Industry and Advanced Technology/ President-designate of COP28 UAE, the SCA initiative is contributing to the consolidation of the principle of sustainability in the financial sector. “The SCA initiative for green and sustainability linked bonds and Sukuk is an excellent initiative that aligns perfectly with the broader COP28 agenda with regards to climate finance. The world as a whole needs to do more to advance sustainability in the financial space that in parallel also helps to contribute to sustainable long term economic growth,” he added.

The decision, says Mohamed Ali Al Shorafa, Chairman of the SCA Board of Directors, is also aimed at supporting the SCA efforts to encourage companies to move towards issuing green and sustainability-related bonds and Sukuk to finance sustainable projects related to the environment and climate, and encourages investors and companies to adopt environmentally friendly investment opportunities.

The current registration fee for bonds and Sukuk for the purpose of listing is 0.01% of the value of the issue subject to a maximum amount of AED30,000.

SAMA Accelerates FinTech Digital Transformation of the Saudi Financial Services Sector with New BNPL Operator Licences and Open Banking Innovator Permits

Riyadh – The Saudi Central Bank (SAMA) continued its efforts to accelerate the digital transformation of the Saudi financial services sector through the licensing of various players in the FinTech sector in May 2023, especially in electronic payments, supporting payment infrastructure, and encouraging its adoption.

On 31st May 2023, SAMA granted Spotii and Madfu permits to carry out Buy Now Pay Later (BNPL) solutions “pursuant to Saudi Central Bank Law and Finance Companies Control Law for providing finance to customers wishing to purchase products or services from merchants without incurring term financing cost.”

These licences are aimed at enticing a new segment of investors and companies that can bring added value to the sector for more efficient operation, while maintaining full adherence to the regulatory and supervisory guidelines defined by SAMA.

In April 2023, SAMA licensed the latest FinTech company – Rasid Payments Company for Financial Technology to provide payment solutions through PoS. This brings the total number of payment companies licensed by SAMA to 24, in addition to six companies ‘granted in-principle’ approvals. At the same time, SAMA also granted Creative Future for Digital Brokerage a license to carry out finance aggregation services, and MIS Forward a permit to carry out ‘Buy Now Pay Later (BNPL)’ solutions pursuant to the two relevant laws.

SAMA says it is constantly striving to support the finance sector and FinTech for enhancing operational efficiency to promote financial inclusion for the various segments of the society in the Kingdom. As such “granting permits to BNPL companies is a step towards achieving the objectives of the FinTech Strategy in its pursuit to make Saudi Arabia among the leading countries in FinTech.”

SAMA in fact is currently consulting on draft “Rules for Regulating Buy Now Pay later (BNPL) Companies.” In the interest of transparency and wider participation, SAMA has invited stakeholders and the public to provide suggestions and observations on the draft Rules by visiting the Public Consultation Platform at the National Competitiveness Center.  This comes as part of SAMA’s role in supervising and regulating the BNPL companies, and its continuous effort to develop the financial sector in general and empower the FinTech sector in particular.

According to the central bank, these Rules set the minimum standards and procedures required to practice the BNPL activity and sustainability of the sector without compromising Financial Consumer Protection Principles and their rights.

SAMA also granting permits to three innovators to test their Open Banking solutions in the Regulatory Sandbox. These innovators are: Tarabut Gateway Company For Information Technology, Umg Alholol Trading Co (known as Single View), and Drahim App for Financial Technology. With these additions, the total number of innovators permitted to operate under SAMA’s Regulatory Sandbox reached 45, where 18 of them have successfully graduated and became licensed by SAMA to provide their solutions to the consumers.

SAMA has recently issued an updated Regulatory Sandbox Framework to allow financial institutions, local and international startups to apply to the Regulatory Sandbox throughout the year.

Malaysia’s Mortgage Securitiser Cagamas Berhad Continues Issuance Momentum with RM3.42bn (US$740m) Hybrid Transaction in May

Kuala Lumpur – Cagamas Berhad, the National Mortgage Corporation of Malaysia, one of the most prolific issuers of Sukuk, continued its issuance momentum into 2023 with the successful pricing of an aggregate RM3.42 billion (US$740 million) worth of funds raised.

The transactions comprised a total of RM943 million (US$203.85 million) 3-month funding via Conventional Commercial Papers (CCPs), Islamic Commercial Papers (ICPs) and Repurchase Agreements (REPO), RM2.13 billion 1-year, 2-year, 3-year and 10-year Conventional Medium Term Notes (CMTNs) and SGD103 million (RM350 million equivalent) 1-year Singapore Dollar Medium Term Notes (SGD EMTNs).

“We are pleased with the successful conclusion of the issuances from both domestic and foreign sources, notwithstanding global concerns on the US debt ceiling issues as investors continue to seek for high investment grade papers. Proceeds raised from the issuances will be used to fund the purchase of housing loans and house financing from the domestic financial system, reflecting the ongoing financial intermediatory role performed by the Company in the domestic banking system,” said President/Chief Executive Officer, Datuk Chung Chee Leong.

“Total funds raised by the Company to-date in 2023 stands at RM9.76 billion (US$2.11 billion). Cagamas has concluded a total of six foreign currency issuances including SGD and Hong Kong Dollar amounting to RM2.35 billion equivalent, year-to-date,” added Datuk Chung.

The SGD denominated bonds, issued via the Company’s wholly-owned subsidiary, Cagamas Global P.L.C. are fully and unconditionally guaranteed by Cagamas while the Ringgit issuances, which will be redeemed at their full nominal value upon maturity, are unsecured obligations of the Company, ranking pari passu with all other existing unsecured obligations of the Company.

Proceeds raised from both issuances will be used to fund the purchase of housing loans and house financing from the domestic financial system, “indicating that Cagamas, being the financial intermediary between the fixed income and mortgage market, continues its role as one of the viable funding options for Financial Institutions (FIs) in Malaysia,”

Cagamas plays a major role in Sukuk origination and continues to be an innovator in the mortgage finance and securitisation market. The Cagamas papers are listed and traded under the Scripless Securities Trading System of Bursa Malaysia. The papers which will be redeemed at their full nominal value upon maturity, are unsecured obligations of the Company, ranking pari passu with all other existing unsecured obligations of the Company.

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 RM369.72 billion (US$79.92 billion) worth of corporate bonds and Sukuk.

IILM Continues Consecutive Monthly Auction in Early June 2023 with an US$1.2bn Reissuance of Short-Term A-1 Rated Sukuk over Three Tenors

Kuala Lumpur – The International Islamic Liquidity Management Corporation (IILM), an international organisation that develops and issues short-term Sharia’a-compliant financial instruments, successfully launched its sixth series of Sukuk issuances of 2023 on 10th June with the reissuance of an aggregate US$1.2 billion short-term Sukuk in three tranches across three different tenors of one, three, and twelve months respectively.

The auction on 10th June 2023 comprised a reissuance of US$1.2 billion short-term Sukuk across three tranches and was priced as follows:

  1. US$470 million of 1-month tenor certificates at a profit rate of 5.35%
  2. US$460 million of 3-month tenor certificates at a profit rate of 5.60%
  3. US$270 million of 12-month tenor certificates at a profit rate of 5.65%.

According to IILM, the auction generated a robust demand from both Primary Dealers and investors with a combined orderbook of US$1.70 billion, representing an average bid-to-cover ratio of 147%.

Dr. Umar Oseni, Chief Executive Officer of the IILM, stressed that “Given the size of today’s issuance, we are pleased with the successful conclusion of the IILM’s sixth auction for the year. We are particularly pleased with the issuance of the 12-month tenor, as it marks the third time the longer tenor has been issued since its inaugural issuance in July last year. Despite the challenging global market conditions on the back of the US debt ceiling issues, today’s auction saw a healthy coverage ratio across all tenors, signifying a sustained demand for the IILM’s Islamic liquidity management instruments by investors seeking high quality Sharia’a-compliant papers.”

The Sukuk transaction was executed under IILM’s US$4 billion short-term Sukuk Issuance Programme. The Programme and IILM Sukuk are rated “A-1” by S&P Global and “F1” by Fitch Ratings. Further to the above two reissuances, the IILM has achieved year-to-date cumulative issuances totalling US$5.55 billion through 18 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 Ṣukuk across varying tenors and amounts to cater to the liquidity needs of institutions offering Islamic financial services. Since its inaugural issuance in 2013, the IILM has issued a total of US$93.05 billion through 208 short-term Sukuk issuances ranging from 2-week to 12-month tenor, “reflecting the organisation’s ability to provide high quality Sharia’a compliant instruments and reliable offerings to both Primary Dealers and investors, as well as offering stability to the global Islamic liquidity market.”

The IILM’s short-term Sukuk programme has a current outstanding issuance size amounting to US$3.51 billion. The IILM’s short-term Sukuk is distributed by a diversified network of 10 primary dealers globally, namely Abu Dhabi Islamic Bank, Al Baraka Turk, Boubyan Bank, CIMB Islamic Bank, Dukhan Bank, First Abu Dhabi Bank, Kuwait Finance House, Maybank Islamic, Qatar Islamic Bank, and Standard Chartered Bank. The IILM short-term Sukuk programme is rated “A-1” by S&P and “F1” by Fitch Ratings.

Share this post