It has been another frantic month in the Islamic capital markets, as Paul McNamara reports
Unicorn Investment Bank, the Bahrain-based Islamic investment bank, has been behind some of the most interesting Sukuk issues to date and now looks like it is about to break new ground. Amongst its hectic pre-summer plans are arrangements to issue a $800 million Sukuk. While details are still sketchy, this is bound to be one to watch.
In neighbouring Kuwait the International Investment Group (IIG), an Islamic investment bank with activities in underwriting, portfolio management and fund management, looks like it will price its 5-year $150 million Sukuk exchangeable trust certificates at 150 to 200 basis points over Libor at the end of the month of May. The issue will come from IIG Funding Limited, which is the name of the Jersey-based SPV behind the Modarabah issue. The Sukuk holders will be granted rights to exchange the Sukuk into equity in IIG.
Still in Kuwait, United Real Estate Company will sell Sukuk worth $100 million to finance various real estate projects. BNP Paribas is tipped to be the lead manager on the deal. The tenor of the Sukuk will be five years and the pricing looks like it will be 150 basis points over Libor and the paper will be listed in London on the stock exchange.
The chief executive of Qatar Islamic Bank, Al Jaidah, has now confirmed that the bank will issue a $250 million Sukuk by the year end. This Sukuk could be issued in euros, for €200 million, the proceeds of which will be invested in the European property market. Inovalis from France is said to be working on the deal.
In Dubai, Thani Investments is said to be looking at issuing $100 million in Sukuk the proceeds of which will be used for general corporate purposes. Thani Investments is a subsidiary of the Al Thani Group. The Sukuk's tenor will be five years and it should be priced at 250 basis points above Libor.
The DAAR International Sukuk Company, which is issuing on behalf of Darr Al Arkan Real Estate Development Company (DAAR), the Saudi Arabian property developer, during the month listed its $600 million Sukuk on the DIFX, making it the first Saudi Sukuk to be so listed.
The DAAR Sukuk is a three-year issue based on an Ijarah structure. And the advisers to DAAR were ABC Islamic Bank, Standard Bank, Arab National Bank, Unicorn Investment Bank and WestLB. The Sukuk was sold to investors in Europe, South East Asia as well as the Middle East and was significantly oversubscribed.
The regular Central Bank of Bahrain issue in local currency of five million Bahraini dinars ($13.26 million) short-term182-day Ijarah Sukuk came to market during the month. The profit rate payable is 5.10 per cent which goes some way to explain why the issue was oversubscribed so much: bids received topped 16 million Bahraini dinars ($42.4 million).
Turning to Asia, in Pakistan, the Water and Power Development Authority (Wapda) is looking to raise up to $248 million in Sukuk to finance the construction of some small hydro-generation projects. The issue will be in local currency for PKR15 billion. The 10-year issue will be backed by Ijarah leases and start amortising after 4.5 years, which will take the average life of the debt to 7.5 years.
This will be Wapda's second Sukuk to date. Wapda is looking to price the Sukuk at 25 basis points below the six-month Kibor (Karachi inter bank offered rate). Dubai Islamic Bank Pakistan, National Bank of Pakistan and Standard Chartered Bank Pakistan will be working on the deal.
In Indonesia, PT Indonesian Satellite Corporation has sold local currency of IDR400 billion ($45 million) in seven year Sukuk at a coupon profit rate of 10.2 per cent. The Sukuk mature in 2014. Local outfits AAA Sekuritas and Danareksa Sekuritas were the lead managers and arrangers of the deal.
Malaysia, of course, always has something to shout about an the month saw an issue from Capable Aspect Sdn Bhd with a Murabahah Underwritten Notes Issuance Facility/Islamic Medium Term Notes Issuance Facility. It was hardly huge, clicking in at just $12 million although it was issued in local currency of MR 40 million. The seven year Murabaha issue was lead arranged by MIDF Amanah Investment Bank Berhad. The proceeds of the Sukuk will be used to purchase another company called Sinagama.
Kuala Lumpur Kepong Berhad has issued Islamic Commercial Paper/Islamic Medium Term Notes Programme for $88 million with a five year tenor. The lead arrangers on the deal were Aseambankers Malaysia Berhad and CIMB Investment Bank Berhad and the deal is structured as Ijarah. Much of the proceeds of the Sukuk will be used to refinance existing debt.
ABS Logistic Berhad also launched and asset-backed Ijarah Sukuk lead managed by Deutsche Bank (Malaysia) Berhad and Hong Leong Islamic Bank. Deutsche was the facility agent whereas Hong Leong was the Shari'ah adviser. This issue, too, is for $88 million and has a 10 year tenor. The proceeds of the Sukuk will be used to part finance the acquisition of some properties.
CIMB Investment Bank Berhad was also active during the month lead arranging three issues for Nucleus Avenue Berhad. One facility is for $1.644 billion, which is an Islamic Medium Term Notes Programme, and another for $499 million which is a Cumulative Non-Convertible Islamic Junior Sukuk. The third is a relative tiddler for $176 million and is an Islamic Commercial Paper Programme/Medium Term Notes Programme.
© Banker Middle East 2007
