IFN weekly market roundup: 28th July – 3rd August 2018

Date: Aug 2018

Daily Cover

This week, a new survey sheds light on the health of the GCC’s debt capital market, a Swiss bank looks to operate in Saudi Arabia which is making drastic moves to curb non-compliance by insurers. Read more in this week’s IFN weekly market roundup. 

Qatar leads the GCC pack 

Qatar is continuing its winning streak from 2017 in the Sukuk and bond issuance space. In the latest survey by the Kuwait Financial Center, the total value of Sukuk and bond issuances in the GCC was recorded at US$95.25 billion for the first half of 2018 (H1 2018), representing an increase of 9.64% from H1 2017. This was led by Qatar at US$19.97 billion through 47 issuances, or 31.9% of the total value of GCC issuances. About 60.2% of the total value was represented by sovereign papers. But it wasn’t all good news. Sukuk issuances in the GCC fell 3.84% from H1 2017, accounting for 19.81% of total market issuances in H1 2018. 

Elsewhere, a few prospective issuances were announced this week. In Malaysia, Uzma Integrasi Padu filed a proposal with the Securities Commissions Malaysia for the establishment of a proposed unrated 15-year Islamic medium-term note program of up to RM1 billion (US$246.03 million) in nominal value. 

In Iran, the Road Maintenance and Transportation Organization received the government’s approval to float Sukuk Musharakah amounting to IRR6 trillion (US$135.92 million) to finance its operations, Mehr News Agency reported. The Securities and Exchange Organization of Iran gave its consent to the issuance by Alborzniroo Fleet and Equipment Company of a five-year Sukuk Ijarah facility worth IRR1.05 trillion (US$23.75 million), according to Agah Group. 

Omani banks commence merger negotiations

The latest entities to be hit by the merger wave in the Middle East are Bank Dhofar and National Bank of Oman (NBO) – both operating Islamic banking window businesses, and both agreeing to proceed with merger negotiations. The merger is subject to the final approvals from the respective boards, shareholders, stakeholders and regulators. 

Iranian sovereign wealth fund aids banks 

The National Development Fund of Iran said that it has allocated US$14.85 billion to 20 lenders in the form of loans in the first four months of the current fiscal year. According to Financial Tribune, to date, US$13.15 billion have been borrowed by 17 banks.

Meanwhile, Iran’s pension fund sector is struggling. The Iran Chamber of Commerce, Industries, Mines and Agriculture’s news portal reported, citing Rasoul Khezri, a member of the Majlis Social Commission, that only two (the Social Security Fund and the Central Bank Pension Fund) out of the 20 funds paying pension to retirees in Iran are not bankrupt. 

Morocco advances Sukuk plans 

Morocco is finally moving ahead with its Sukuk plan which has been postponed thrice and was initially scheduled for issuance earlier this month. The Ministry of Finance of Morocco submitted its maiden sovereign Sukuk project to the Higher Council of Ulemas for approval. 

The nation earlier in April announced that it is planning four dirham-denominated sovereign Sukuk for 2018. Finance Minister Mohamed Boussaid in June said that Morocco will print its first sovereign Sukuk worth MAD1 billion (US$105.57 million) after adopting a regulatory framework governing Sukuk sales. 

Sigma Pensions turns to Islamic investments 

Nigeria’s Sigma Pensions, a pension fund administrator, announced plans to increase investments in private equity with investments made Islamically as part of the company’s efforts to enhance the number of sources of capital for borrowers, The Guardian reported.

Credit Suisse looks to expand into Saudi 

As Saudi opens its doors to foreign players to attract more investors, following the footsteps of the UAE’s Emirates NBD and US-based Citigroup is Credit Suisse, which is headquartered in Switzerland. Reuters reported that Tidjane Thiam, CEO of Credit Suisse which offers Islamic solutions, traveled to Saudi Arabia to apply for a full banking license. 

NASDAQ to launch equity futures 

NASDAQ Dubai is planning to roll out equity futures on 12 Saudi Arabian companies, including Al Rajhi Bank and Alinma Bank which are both Islamic banks, in September. These 12 entities have a combined market capitalization of SAR859 billion (US$228.89 billion), taking up 43% of the market capitalization of the Saudi Stock Exchange. 

Khazanah kerfuffle 

Fresh from the resignation of the entire board of directors of Khazanah Nasional, Malaysia’s sovereign wealth fund, following comments from Prime Minister Dr Mahathir Mohamad that the fund has deviated from its purpose of helping Bumiputeras, new appointments were made to the board. Dr Mahathir was appointed as the new chairman, whereas four directors were elected, namely Azmin Ali, the minister of economic affairs; Mohd Hassan Marican; Sukhdave Singh and Goh Ching Yin. 

Among those tipped to lead Khazanah as the managing director is Shahril Ridza Ridzuan, CEO of the Employees Provident Fund. The appointment of the new managing director will be announced soon. 

SAMA to withdraw licenses of non-compliant insurers 

In the midst of heightened regulatory actions against insurers in Saudi, the Saudi Arabian Monetary Authority (SAMA) said that it will request the Ministry of Commerce and Investment to revoke the operating licenses of five service providers, citing non-compliance. Argaam reported, citing Arabic newspaper Al-Eqtisadiah, that nine out of 14 insurance service providers have complied with the SAMA’s regulatory requirements 20 days ahead of the end of the grace period. 

Al Hilal Bank partners with ADGM 

Al Hilal Bank has signed an MoU with the Abu Dhabi Global Market (ADGM) which will see the bank collaborate with the ADGM’s Financial Services Regulatory Authority to develop Islamic financial products. The Islamic bank will establish an SPV within the ADGM to facilitate several initiatives, and the two entities will jointly develop technologies addressing real business challenges including mobile and e-banking and digital value-added services.

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