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 Abu Dhabi Property Developer Aldar Investment Benchmark US$500m Sukuk Wakala/Murabaha Attracts Strong Investor Demand

Abu Dhabi – Aldar Investment Properties LLC, a 100% owned subsidiary of Abu Dhabi-based property developer, Aldar Properties PJSC, successfully placed a benchmark US$500 million fixed-rate US dollar-denominated Sukuk Wakala/Murabaha with a tenor of 10 years and which matures in October 2029.

The Sukuk, according to Aldar Investment, carries a coupon rate of 3.875%, payable semi-annually and the lowest rate ever achieved by Aldar, following strong investor demand. The transaction, which marked the first 10-year public Sukuk offering by an Abu Dhabi-based issuer, was more than 6 times oversubscribed, with global investors accounting for 71% of the total transaction allocation.

Aldar Investments owns and manages an AED20 billion diversified portfolio of high-quality income-generating residential, retail, commercial and hospitality assets.

The Sukuk was issued through a Cayman Island registered special purpose vehicle, Aldar Sukuk (No 2) Limited,

Talal Al Dhiyebi, CEO of Aldar, stressed that “the success of the transaction represents a strong endorsement by the global investment community of the Abu Dhabi economy and of Aldar’s leading position in the regional real estate sector. This landmark deal further strengthens our balance sheet, and is testament to Aldar Investments’ status as one of the most efficient platforms for property ownership in the region.”

The net proceeds of the offering will be used to refinance existing debt. The issuance, added Aldar Investment, contributes to an optimal diversification of Aldar Investments’ funding base and extends Aldar’s overall duration of its liabilities.

Aldar Investments is rated Baa1 by Moody’s, the highest credit rating for a corporate non-government corporate in the region reflecting its leading market position in Abu Dhabi, stable recurring revenue, high quality of diversified assets, high occupancies, diversified tenant base and strong operating model.

Aldar mandated Dubai Islamic Bank, First Abu Dhabi Bank, HSBC and Standard Chartered Bank as Joint Global Coordinators and Joint Lead Managers, along with Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Emirates NBD Capital and Sharjah Islamic Bank as Joint Lead Managers. Investor meetings were held in Europe, Asia, and the Middle East in early October 2019.

The Sukuk certificates were admitted for listing and trading on the official list and regulated market of Euronext Dublin in October 2019.

Malaysian Mortgage Corporation Cagamas Raises RM500m Through Latest Sukuk Offering in October 2019

Kuala Lumpur – Cagamas Berhad, the National Mortgage Corporation of Malaysia, one of the most prolific issuers of Sukuk, continues to play a major role in Sukuk issuance and in the Islamic mortgage securitization market in Malaysia. In October 2019, Cagamas issued a multi-tenored RM500 million Islamic Medium Term Notes (IMTN) issuance, a multi-tenured RM100 million Conventional Medium Term Notes (CMTN) issuance and a RM200 million 3-month Conventional Commercial Papers (CCP) issuance.

The issuances represent the Company’s 19th and 20th issuance exercise for the year of which proceeds will be used to fund the purchase of mortgages and Islamic home financings from the financial system.

“The pricing of the IMTN and CMTN were concluded a day prior to Malaysia’s Budget 2020 announcement on 11 October 2019. The IMTN and CMTN were successfully priced despite subdued market conditions as investors opted for a wait-and-see approach ahead of the budget announcement. This was evidenced by the soft interest gathered from the re-opening tender of the 10-year Malaysian Government Securities on 9 October 2019 that was priced with a mere 1.233 times book-to-cover (BTC) ratio” said Datuk Chung Chee Leong, President/Chief Executive Officer of Cagamas.

“The Company’s IMTN and CMTN pricing exercise was well received by investors – in particular its 3-year IMTN which obtained overwhelming response with a BTC ratio of 2.9 times against the backdrop of a slight softening in demand within the domestic market. This enabled the Company to price its IMTN on the lower end of the price guidance of 3.45% to 3.50%. The Company also managed to conclude its final pricing ahead of its AAA rated counterpart, which also tapped the market on the same day,” added Datuk Chung.

Cagamas also successfully secured competitive pricing for its 3-month CCP, referenced at 5 basis points below the 3-month onshore Kuala Lumpur Interbank Offered Rate. The conclusion of the deals brings the company’s year-to-date issuance to RM6.7 billion.

The papers, which will be redeemed at their full nominal value upon maturity, are unsecured obligations of the company, ranking pari passu among themselves and 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 RM317.6 billion worth of corporate bonds and Sukuk.

 

Albaraka Turk Raises TL950 million Through Two Sukuk Ijara Offerings in October 2019

 

Istanbul – Leading Turkish Participation bank, Albaraka Turk Katilim Bankasi, a subsidiary of the Bahrain-incorporated but Saudi-owned Albaraka Banking Group, had TL950 million in two Ijara (Lease Certificate) Sukuk issuances in October 2019.

The Sukuk were issued through its subsidiary Bereket Varlik Kiralama AS. The first issuance for TL600 million was on 4 October 2019 comprising two tranches – a TL150 million Sukuk and a TL450 million issuance. In a statement, Albaraka Turk said that it upsized the issuance from TL450 million to TL600 million due to strong demand from local institutional investors.

The second issuance for TL350 million was issued on 16 October 2019.

Malek K. Temsah, Albaraka Turk’s Assistant General Manager of Treasury, Investment Banking, and Financial Institutions, said that the uniqueness of this transaction was in its dual-tenured nature with investors able to subscribe to either the 98 day issue or the 147 day issue, based on their different investment horizon appetites and pricing expectations. 

IILM Re-issues US$500m Sukuk in Two Tranches in October 2019

Kuala Lumpur – The International Islamic Liquidity Management Corporation (IILM) successfully re-issued A-1 short-term Sukuk in October 2019 amounting to US$500 million in two series with 3-week and 3-month tenors, respectively. The reissuance comprised a US$200 million with a 3-week tenor and US$300 million with a 3-month tenor, each with a profit rate of 2.00%.

According to the IILM, the reissuance was well supported with bid-to-cover ratios of 150%, and 289% for the 3-week and 3-month Sukuk series’ respectively.

“The profit rates achieved are 2.00% for the 3-week, compared to the indicative pricing guidance range of 1.94%-2.00%; and 2.00% for the 3-month, compared to the indicative pricing guidance range of 2.04%-2.10%, the IILM said in a statement.

Purchases by Islamic Primary Dealers (PDs) in the primary auction amounted to 80%, 66% for the 3-week and 3-month Sukuk respectively.

In terms of geographical distribution, the allocation of GCC-based PDs stood at 70.5% and 32% for the 3-week and 3-month bid-to-cover ratio of 150%, and 289%, respectively. Asia-based PDs were respectively allocated 25% and 34% of the 3-week and 3-month bid-to-cover ratio of 150%, and 289%. The PDs based in other jurisdictions were awarded 4.5% and 34% across the 3-week and 3-month bid-to-cover ratio of 150%, and 289%, respectively. The PDs based in other jurisdictions were allocated 1% and 45% across the 1-month and 3-month Sukuk respectively.

According to the IILM, the primary dealers that participated in the three auctions 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.

First Dedicated Tajik Islamic Bank, Tawhidbank, Starts Operations  

Dushanbe –Tajikistan is the latest country to authorise and open its first full-fledged Islamic bank. OJSC Tawhidbank started operations in September 2019 after receiving a banking license from the central bank, the National Bank of Tajikistan.

Tawhidbank has its roots in a conventional mid-sized bank Sohibkorbank, which was established in 1999. The joint stock bank received permission from the regulatory authority to convert into a full-fledged Sharia’a-compliant financial institution after partnering with the Islamic Corporation for the Development of the Private Sector (ICD), the private sector funding arm of the Islamic Development Bank (IsDB) Group.

Tawhidbank currently has five branches and 48 banking services throughout the country. Tajikistan currently has seventeen banks, including Tawhidbank.

USAID Extends US$10m Guarantee to Tanzanian Islamic Bank, Amana Bank, to Finance Micro and SME Agricultural Enterprises

Dar es Salam – The United States Government, through the U.S. Agency for International Development (USAID), signed a US$10 million Financing Portfolio Guarantee Agreement on 7 October 2019 with Tanzanian Islamic bank, Amana Bank. The development credit authority’s aim is to strengthen the bank’s ability to provide financing to agriculture-related micro-, small-, and medium-enterprises and women- and youth-owned businesses in Tanzania.

During the signing ceremony, Dr. Diana B. Putman, USAID Deputy Assistant Administrator for the Bureau of Africa said, “The guarantee agreement is intended to strengthen Amana Bank’s ability to provide financing to agribusinesses in Tanzania. As a result, we anticipate this program will contribute to sustainable growth of agriculture-related businesses.”

In addition to supporting increased access to credit, the agreement expands access to customers and regions throughout Tanzania, including Zanzibar. The agreement with Amana Bank is USAID’s first partnership with an Islamic bank in sub-Saharan Africa.

The U.S. government supports business development and the role of the private sector in contributing to Tanzania’s development and capacity to achieve self-reliance.

Turkish Treasury Collects 12,662 Kilograms of Gold for Latest Issuance of Gold-backed Lease Certificates (Sukuk Ijarah)

Ankara – The Turkish Ministry of Finance and Treasury collected 3,015 kilograms of gold (995/1000 purity) from institutional investors for the issuance of gold bonds and 12,662 kilograms of gold for the issuance of lease certificates (Sukuk Ijara) on 9 October 2019 with value dates of 11 October 2019 and maturity dates of 9 October 2021.

The lease certificates were issued by Hazine Mustesarligi Varlik Kiralama A.S., wholly-owned by and on behalf of the Ministry of Finance, the obligor.

The Ministry of Finance previously issued gold-backed lease certificates in May, June and September this year “to diversify borrowing instruments, broaden the investor base and bring the idle gold into the economy.” In September 2019, the Turkish Ministry of Finance and Treasury collected 16,962 kilograms of gold (995/1000 purity) for issuance of gold-back lease certificates (Sukuk Ijarah) and 3,985 kilograms of gold for gold bond issuance on 18 September 2019.

The Ministry of Finance first started selling gold bonds and gold-denominated lease certificates in December 2018. According to Finance Minister Berat Albayrak “citizens were provided with a safe investment tool for their gold savings. With the gold bond and gold-denominated lease certificate issuance through five banks, our citizens will both win themselves and contribute to the national economy.”

IRTI Launches Dedicated FinTech Platform for the Protection and Verification of Awqaf (Islamic Endowments) Properties.

Jeddah – The Islamic Research and Training Institute (IRTI), the research arm of the Islamic Development Bank (IsDB) Group, is in the process of establishing an electronic platform for the protection and verification of Awqaf (Islamic endowments) properties. The platform aims at preserving the rights of beneficiaries of the Awqaf and ensuring the sustainability of its developmental and social functions.

The “Ish’had” Platform, according to IRTI, will be built using FinTech, including Blockchain and the Internet of Things, to ensure the verifiability of Awqaf records, management and performance, so that the Awqaf Endowments can achieve their objectives and maintain their sustainability across generations.

IRTI points out that the platform does not interfere with the local procedures and requirements of the country hosting the Waqf. The platform is an open choice for all Waqf institutions and Waqf donors to benefit from its authentication services that provide additional protection, transparency and supervision of the Waqf by members of the platform around the globe.

The “Ish’had” Platform is to complement the platform of the World Waqf Center of Excellence, which the Islamic Development Bank (IsDB) plans to establish in Medina, Saudi Arabia, later this year. The Center of Excellence aims to support Awqaf institutions and enhance communication and collaboration among members of the Awqaf industry worldwide.

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