Saudi Arabia’s InoChem Signs SR825m Islamic Credit Facility with Alinma and Al Bilad Banks to Finance BOO Soda Ash Complex

Jeddah – Saudi Arabia’s InoChem, in which Sahara Petrochemicals Company (a wholly owned subsidiary of Sipchem) has a 30% equity stake, obtained a SR825 million Islamic credit facility in December 2019 from Alinma Bank and Al Bilad Bank.

In a disclosure to Tadawul (the Saudi Stock Exchange) the facility has a tenor of 13 years and is guaranteed by Sipchem based on its ownership in InoChem. The guarantees relate also to project completion cost overruns.

The proceeds of the facility will be used to finance the development, construction, owning and operation of an industrial complex in Ras Al-Khair Industrial City to produce soda ash in two grades (light and dense) and calcium chloride in two grades.

The total production capacity in its first phase is expected to be 600 thousand tons per annum, making it the largest producer of these products in the GCC. Production startup is expected during the first half of 2022. The facility servicing will start in the first to operating years.

Sahara Petrochemicals Company and Sipchem are regular issuers of Sukuk and accessing Islamic finance facilities.

Warees Halal Signs Collaboration Agreement with Japan’s JTB to Tap Halal Economy to Service Growing Influx of Muslim Tourists and Upcoming Tokyo Olympics and Paralympic Games

Singapore – Warees Halal Limited, a subsidiary of the Islamic Religious Council of Singapore (MUIS), has signed a cooperation agreement with Japan’s JTB Asia Pacific to help companies tap the growing halal food and travel market in Japan and opportunities in the growing global Islamic economy.  

The collaboration covers the promotion and provision of halal certification and related services in Japan based on the Singapore MUIS Halal Standards and Quality Management System. Warees Halal provides international certification, capacity building, advisory and trade-link services.  JTB was formerly the Japanese government’s Japan Tourist Bureau and is now a privately-owned travel agency with offices in 40 countries.

 “In Japan, there is an increasing awareness of the word “Halal”, but it does not mean that we understand exactly what it is,” explained Dai Ito, Director of Business Development at the Japan External Trade Organisation in Singapore.

Japan’s government and private sector companies have in recent years accelerated the development of halal and Muslim-friendly products and services in the country, especially for inbound Muslim tourists to Japan.

Not surprisingly, the countries will also collaborate on the development of Japan’s halal supply chain and ecosystem and Malaysia will offer its halal expertise to organisers of the Tokyo 2020 Olympic and Paralympic Games.

Warees chairperson Sallim Abdul Kadir called the agreement with JTB “a milestone” for both Japanese and Singapore organisations with regards the halal industry.

“Warees Halal views Japan as one of the promising markets experiencing a boom in inbound tourism from Asia and the Middle East, in particular Muslim visitors. With our multi-cultural background in Singapore, our experience and expertise place us as an ideal partner to work with JTB in Japan,” he further explained.

Albaraka Turk Raises TL400 million Through Sukuk Ijara Offering in December 2019

Istanbul – Leading Turkish Participation bank, Albaraka Turk Katilim Bankasi, a subsidiary of the Bahrain-incorporated but Saudi-owned Albaraka Banking Group, raised TL400 million through an Ijara (Lease Certificate) Sukuk issuance in December 2019.

Albaraka Turk executes regular Turkish Lira Lease Certificate Issuances in the domestic market. “With the help of these issuances, we aim to contribute to the development of Islamic Capital Market in Turkey as well as enhance our investor base,” said Malek K. Temsah, Albaraka Turk’s Assistant General Manager of Treasury, Investment Banking, and Financial Institutions. 

IILM Re-issues US$300m Sukuk in December 2019

Kuala Lumpur – The International Islamic Liquidity Management Corporation (IILM) successfully re-issued A-1 short-term Sukuk totaling US$300 million in December 2019 with a 3-month tenor at a profit rate of 1.92%.

According to the IILM, the reissuance was well supported with demand for the 3-month Sukuk reached a bid-to-cover ratio of 179% with an order book of US$536 million. The IILM 3-month Sukuk was priced at 1.92% under the competitive auction methodology, compared to the indicative pricing guidance range of 1.92%-1.98%.

In terms of geographical distribution, the allocation of the 3-month IILM Sukuk is distributed across GCC and other jurisdictions, to 96% and 4%, respectively of the amount issued.

According to the Corporation, this is the first time since 2016 that the IILM issued a tranche in the month of December, ending the year with a total of US$9.03 billion issued through 29 IILM Sukuk offerings, which represents 27% of the total global US$ Sukuk issued in the market year to date. The full year IILM Sukuk bid-to-cover ratio hit 225% on a weighted average basis.

Regulatory requirements helped shape the new offering, in particular Basel III’s liquidity coverage ratio (LCR) designed to improve banks’ resilience to liquidity shocks, pursuant to which banks are obliged to hold a sufficient reserve of high-quality liquid assets (HQLA) to allow them to survive a period of significant liquidity stress lasting 30 calendar days. Several new tenors, says the Corporation, “were introduced this year such as 2-week, 3-week as well as the 1-month paper that has been offered on a regular basis for the first time. These shorter tenors were well received by the market as an additional tool to fulfil the Basel III LCR requirement. As the funds will be withdrawn within 30 days or less, it can be considered as 100% inflow at the LCR denominator, especially for investors not benefiting from HQLA treatment in their jurisdiction.”

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. 

SASCO Raises SR713.2m in Two Separate Islamic Credit Facilities from SABB and Saudi Fransi Bank in December 2019

Jeddah – Saudi Automotive Services Company (SASCO) signed two Islamic finance facility agreements in December 2019 raising SR713.2 million in the process.

The first facility agreement for SR190 million was signed with Saudi British Bank (SABB). It is a medium term financing with a tenor of 5 years from the date of drawdown. The facility is guaranteed with an Order Note of 100% of the total facilities amount in addition to a share pledge of the company’s investment in Saudi ARAMCO. According to SASCO, the final amount of financing will be determined based on the number of shares that will be allocated to the company after the ARAMCO subscription.

The second facility extended by Saudi Fransi Bank comprises renewal and amendments of existing facilities totalling SR523.20 million. The agreement saw the increasing of a long-term financing of SR200 million; renewal of an existing long-term financing of SR158.2 million; a SR20 million short-term financing; SR115 million in bank guarantees; SR5 million towards opening documentary credits and SR25 million for a hedging facility.

According to SASCO, the short-term financing is extended to one year, the long-term financing is extended to 6 years from the date of withdrawal, with a grace period of 1 year. The facilities for renewal and amendment of the agreement are guaranteed with an Order Note of 100% of the total facilities amount.

The proceeds from the facilities is to finance buying new locations, building new fuel stations and developing the existing stations as well as financing SASCO’s working capital requirements.

Canada’s Manzil Mortgage Investment Fund Onboards on NEO Connect Platform and Lists on DealSquare

Toronto – Canadian-based centralized platform that distributes financial assets from asset managers to investors, NEO Connect onboarded Manzil, a Halal mortgage lender in North America in December 2019. NEO Connect has made the Manzil Mortgage Investment Fund available as a platform traded fundTM (PTFTM). 

“This fund fully complies with Shariah standards, and Manzil is the only entity in Canada that follows all guidelines for Shariah governance established by the Accounting and Auditing Organization for Islamic Financial Institutions,” said the Platform in a statement.

The Manzil PTF is available on NEO Connect under the symbol MANZL, and is also listed on DealSquare, Canada’s first centralized platform for private placement offerings. DealSquare uses NEO Connect technology to seamlessly integrate OM funds into client accounts, back office systems and the Canadian Depository for Securities (CDS).  By leveraging both NEO Connect and DealSquare, the Manzil PTF and the dealer community will benefit from the distribution power, transaction efficiencies and cost savings the combination of these two platforms offer.

“We are proud to make our Canadian-first Halal product available as a PTF on NEO’s innovative distribution eco-system,” said Mohamad Sawwaf, Co-founder & CEO, Manzil. “The Canadian value of Shariah-compliant mortgages in 2017 was estimated at US$2 billion, of which we have captured US$300 million on our waitlist, and growing at US$5 million per week, proving there is a significant demand for Halal financing and investment products. Our partnerships with NEO and DealSquare will give investors the most efficient access to our fund.  We are confident that Toronto is the perfect fit for an Islamic finance North American hub and we are very pleased to have NEO as a capital-raising partner as we bring our product to the market.”

NEO Connect has experienced rapid growth within the regulated asset management industry in Canada since its launch in 2016, and has allowed fund providers to raise nearly $1 billion across 70 privately traded funds.

Aeon Credit Launches RM2bn Sukuk Issuance Programme with First Tranche set to Come to Market in Q1 2020

Kuala Lumpur – Malaysia’s Aeon Credit established a RM2 billion Sukuk issuance programme in December 2020. The proceeds will be used to finance Shariah-compliant credit facilities to customers and to refinance any existing debt of the issuer.

The programme will issue senior Sukuk and/or subordinated Sukuk based on Wakalah and Murabahah (via Tawarruq) structures. The first tranche under the new Programme will be issued imminently.

Aeon Credit last issued a Sukuk in October 2019, a RM390 million issuance.

CIMB Investment Bank and Hong Leong Investment Bank acted as joint principal advisors and joint lead arrangers for the new Sukuk programme, while the above two together with MUFG Bank Malaysia are the joint lead managers, and CIMB Islamic Bank the Shariah advisor for the Sukuk programme.

Saudi Corporates Raise SR118m of Islamic Credit Facilities to Finance Balance Sheet Activities and Working Capital Requirements

Jeddah – Saudi Company for Hardware (SACO) signed a SR100 million Islamic credit facility agreement with Gulf International Bank in December 2019. The facility has a tenor of five years including a one year grace period effective from 19 December 2019.

The facility is guaranteed with a promissory note issued by SACO amounting to SR100 million. The proceeds of the facility, according to SACO will be used to finance working capital and capital expenditure requirements and also to settle other bank loans.

This is the second Islamic credit facility accessed by SACO in as many months. In November 2019, SACO obtained a SR330.907 million facility from the Saudi British Bank (SABB). That facility, said SACO in a disclosure to Tadawul, had a tenor of seven years including a two-year grace period effective from 14 November 2019.

Several other Saudi corporates accessed Islamic finance facilities in December. They include Alian Industry Company, a subsidiary of Al Kathiri Holding Co, which signed a 540-day SR18 million Islamic finance facility agreement with Riyad Bank. The facility is guaranteed by an Order Note of 100% for the total facilities amount in addition in exchange for the assignment of an Industrial Development Fund contract, which was previously announced on 2 October 2019.

According to Alian Industry Company, the proceeds from the facility will be used to accelerate and complete the process of establishing a construction technology factory in Sudair City for Industry and Business on time (the expected date of completion of works and the beginning of production is the third quarter of 2020).

“It is worth to mention that the technology of producing the three-dimensional concrete panels is very developed and sophisticated. Also, it is an alternative for traditional construction methods with a cost and time savings of 30% from the traditional way and process of construction,” said the company in a Tadawul disclosure.

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