In a report addressing the importance of Islamic Sukuk Market
Sukuk aggregates almost reached USD 5 billion, 61.7% of the volume issued by Bank Negara Malaysia
Kuwait Finance House Research Limited (KFHR) prepared a report on the Islamic Sukuk market. The report notes that the Sukuk market in month of April has been the lowest year to date. The following are the details of the report.
Sukuk issuance during the month of April declined to the lowest level since July 2010 with USD 4,862.6 bln coming from the primary market. The month was dominated by sovereign issuers, particularly in Malaysia where the central bank contributed USD3bln of the total sukuk for the month. The Middle East market remains relatively dry this year as conditions remain tough given the continued spread of political uprisings. Hence, there have only been four corporate issues from the region so far this year.
Among the sukuk placed was the first sukuk out of Jordan by Al-Rajhi Cement, a company registered in the Dubai International Financial Centre which invests in the global cement industry. The inaugural sukuk was structured as an Ijarah transaction with a maturity of seven years. The sukuk was subscribed for by a number of leading Islamic and commercial banks including Capital Bank, Cairo Amman Bank, Islamic International Arab Bank, Union Bank, Jordan Kuwait Bank, Bank of Jordan, and Arab Islamic Bank.
The Central Bank of Bahrain issued a USD530.4mln Ijarah sukuk during the month with a tenure of five years. The sukuk marks the second largest issuance by the central bank and the largest issue from the country since June 2009.
Sukuk issuances for the month were led by sovereign issuers who accounted for 80.4% of the value, followed with corporates with 15.8% and government related entities with 3.8%. So far this year, sovereigns have made up for 88% of all issuance while corporate constitute 8.5%.
On the currency front, sukuk issued during March 2011 were again mostly denominated in Malaysian Ringgit, accounting for 78.1% of issuance, while the rest of the sukuk were issued in Bahraini Dinar (12.1%), Indonesian Rupiah (7.4%) and Jordanian Dinar (2.4%). The largest for the month was the Bank Negara issuance at MYR2bln (USD661.64mln).
A total of 53 sukuk were issued in April vs. 44 sukuk in March and 40 in February. Among these, 29 were issued by the corporate sector which totalled USD772.8mln (Mar: USD276.4mln, 180%) while there were 14 sovereign issuances which totalled USD3.93bln (Mar: USD3.70bln, 6.2%).
The only corporate issuance outside of Malaysia during the month of April was the Jordanian sukuk by Al-Rajhi Cement.
Overview of April 2011
Sukuk Issuance Trend | Sukuk by Domicile |
Sukuk by Structure | Sukuk by Sector |
Source: Bloomberg, Zawya, IFIS, KFHR
Top 10 Sukuk Issuance by Amount (April 2011)
Issuer | Domicile | Structure | Currency | Issue Size (USDmln) |
| Bank Negara Malaysia | Malaysia | Mudharabah | MYR | 661.64 |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 660.50 |
| Central Bank of Bahrain | Bahrain | Ijarah | BHD | 530.40 |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 335.82 |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 331.94 |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 331.33 |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 330.12 |
| Perusahaan Penerbit SBSN Indonesia | Indonesia | Ijarah | IDR | 232.60 |
| Pengurusan Air SPV Berhad | Malaysia | Unknown | MYR | 168.75 |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 165.17 |
Source: IFIS, Zawya, Bloomberg, KFHR
Top Five Corporate Sukuk Issuance by Amount (April 2011)
Issuer | Domicile | Structure | Currency | Issue Size (USDmln) |
| Al Rajhi Cement | Jordan | Unknown | JOD | 85.00 |
| CIMB Islamic Bank | Malaysia | Musharakah | MYR | 84.00 |
| Esso Malaysia Berhad | Malaysia | Bai' Inah | MYR | 66.02 |
| Telekom Malaysia | Malaysia | Ijarah | MYR | 49.73 |
| 1 Warisan Sdn Bhd | Malaysia | Mudharabah | MYR | 33.32 |
Source: IFIS, Zawya, Bloomberg, KFHR
Top Underwriters April 2011
Rankings | Market Share |
Amount (USD mln) | Number of Issuances |
Source: Bloomberg, KFHR
Announced Sukuk in April 2011
Issuer | Domicile | Structure | Currency | Issue Size (USDmln) |
Liquidity Management House | Kuwait | - | USD | 1,000 |
Bank Negara | Malaysia | Mudharabah | MYR | 333.23 |
Government of Senegal | Senegal | - | USD | 200 |
Pengurusan Air SPV Berhad | Malaysia | Murabahah | MYR | 161.61 |
Emery Oleochemicals Group | Malaysia | - | MYR | 158.01 |
Noor Islamic Bank | UAE | - | USD | 150 |
Source: IFIS, Zawya, Bloomberg, KFHR
Selected Sukuk Yields - March 2011Al-Dar Funding Sukuk Commentary: The yield of Aldar Funding sukuk decreased during the month of April by 31% to 3.844% from 5.569% at the start of the month. Aldar Properties PJSC is expected to report positive performance in 2011 as the company does not expect any more impairments on its properties. The company expects profit to come from the 2,000 residential units it will put up for sale this year and the construction contracts given out for the Yas mall next month. | Dar Al-Arkan Sukuk Commentary: For the month ending April 2011, Dar Al-Arkan's USD450mln sukuk yield dropped 3% to 10.896% from 11.214% after climbing to 12.717% a month earlier. Saudi Arabia's biggest developer by assets said first-quarter profit dropped to SAR273.1mln (USD72.8mln) from SAR398.6mln (USD106.1mln) a year earlier as sales dropped. |
IDB Trust Services Sukuk Commentary: During April 2011, the IDB sukuk yield declined 8% to 1.753%, from 1.902% at the start of the month. ICD, a member of the Islamic Development Bank has recently been mandated to work on a sovereign sukuk issuance by the Senegal government. The issuance is likely to come in around USD200mln. Recently, Fitch affirmed Saudi Arabia's long-term local and foreign currency issuer default rating at AA- with stable outlooks. | QIB Sukuk Funding Ltd Commentary: The QIB sukuk yield dropped slightly during April 2011, decreasing by 3% to 3.306% from 3.406% at the start of the month. The Persian Gulf country's biggest Shariah-compliant lender reported a 7% gain in first-quarter profit as financing income increased. Net income rose to QAR321mln (USD88mln) from QAR300mln (USD82.4mln) a year earlier. The bank's Islamic loan book expanded 3.2% to QAR24.7bln and customers' current and investment accounts grew 1.5% to QAR25.7bln. |
Source: Bloomberg, KFHR
- Ends -
© Press Release 2011
