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17 Feb | Monday
Weekly Round-Up

The global multilateral body, Islamic Financial Services Board (IFSB), will organise a seminar and two workshops in Khartoum, Sudan on 18-20 February 2014. The Insurance Supervisory Authority of Sudan will be the host for the 6th Seminar on the Regulation of Takaful and the Facilitating the Implementation of the IFSB Standards (FIS) on Takaful, while the Central Bank of Sudan is hosting the IFSB Meet the Members Session and the FIS Workshops on Banking.
Meanwhile, the global multilateral entity, Islamic Development Bank (IDB), has allocated USD220mln to finance a thermal power plant in Assiut, Egypt as a part of a nearly USD705mln initiative to fund projects focusing on infrastructure, human development and education in Muslim communities. Of the USD705mln, the bank set aside USD630mln for the infrastructure sector. In addition to funding Egypt's power plant, the bank allocated USD224.4mln to reconstruct a road in Azerbaijan and USD87.4mln to develop water supply and sanitation programs in West African Economic and Monetary Union countries.
Middle East and Africa
Islamic finance continues to make inroads in the Middle East and Africa region. In the United Arab Emirates, Dubai Investment Park, or DIP, a unit of Dubai Investments, saw its USD300mln sukuk oversubscribed by more than 13 times on Thursday (13th February) on the back of surging investor confidence in Dubai's growth. DIP recorded an order book of around USD4bln on its new five-year sukuk transaction. The deal, the first Islamic issue out of Dubai this year, was launched on Thursday morning at 265 basis points over swaps, 35bps inside of guidance.
Meanwhile, Islamic banks in Qatar are gaining strength with Shariah-compliant lenders outperforming their conventional counterparts in many areas during 2013, despite the confines of an increasingly competitive market. The combined assets of the country’s four Islamic banks had topped USD56bln by the end of September 2013, equivalent to almost one third of those held by the eight conventional lenders and up from 13% in 2006.
In Turkey, the Turkish real estate investment trust Kiler GYO is planning to issue a five-year sukuk worth at least USD100mln in the second half of this year. Kiler is talking to banks from Saudi Arabia and Qatar over buying into the issue, which will be used for investment and to extend the maturity of existing loans. Turkey's Islamic finance industry is being reshaped as banks widen their product range and competitors prepare to enter the market.
In Kenya, the growing Shariah compliant banking concept received another boost with medium tier Chase Bank joining the fray with a new dedicated branch in Mombasa, Kenya. Islamic banking has since 2007 attracted two fully fledged, privately owned lenders – First Community and Gulf African – with several conventional banks operating windows. Kenya’s Islamic banks presently operate under the same frameworks as conventional banks.
In Kuwait, the governor of the Central Bank of Kuwait advised that an independent legal entity should oversee the way in which Islamic financial institutions certify they are following Shariah principles. The creation of an independent legal body could see scholars independently reviewing the work of their peers, a format pioneered by Malaysia but mostly absent in the Gulf.
In Malaysia, the Export-Import Bank of Malaysia (MEXIM) said it had priced the world's first US dollar-denominated Islamic bond issue from an export-import bank, selling a USD300mln, five-year sukuk that attracted USD3.2bln of investor orders. The government-owned bank, which supports Malaysian exports and investments abroad, priced the sukuk at 140 basis points over US Treasuries, equivalent to a yield of 2.874%.
In another deal, TNB Western Energy of Malaysia has closed the financing for the 1,000MW coal-fired power project amounting to RM3.65bln (USD1.10bln) in nominal sukuk. The financing, based on the Shariah principles of ijara and wakala, was split into various tranches with maximum tenure of 20 years. The coupon ranges between 5.06% and 5.80%. TNB Western, as the issuer, is a 100% owned subsidiary of Tenaga Nasional Berhad (TNB) in Malaysia.
Indonesia's finance ministry raised IDR1.26tln (USD103.51mln) at a sukuk auction on Tuesday (11th February), below an indicative target of IDR1.5tln. Southeast Asia's biggest economy only sold six-month T-bills and 29-year project-based sukuk, with yields mixed compared with the previous auction on Jan. 28. Total bids were IDR5.349tln rupiah, lower than IDR5.816tln from previous auction.
Meanwhile in Indonesia’s banking sector, Panin Bank Syariah, the Islamic banking unit of Bank Panin Indonesia, plans to provide a savings service for Hajj and Umrah. The bank has been entrusted by the government to receive Payment for Hajj Operational Cost (BPIH). It is targeting a Hajj and Umrah fund between IDR1-1.5tln from four to five thousands customers.
In South Asia, Pakistan's MCB Bank will take a 55 percent stake in Islamic lender Burj Bank according to a filing with the stock exchange. The deal, which still requires regulatory approval, would include an un-specified additional investment by the IDB's Islamic Corporation for the Development of the Private Sector, which already holds a 33 percent stake in un-listed Burj. The move comes amid increased activity in Pakistan's Islamic banking sector, with regulators stepping up development efforts and lenders expanding operations in the world's second-most populous Muslim nation.
In the United Kingdom, the British Government sought to bolster London's position as a centre for Islamic finance on Tuesday by extending its 'Help to Buy' mortgage scheme to loans that comply with Islamic law. Help to Buy was launched last year and offers banks insurance against the risk of lending to home-buyers who cannot afford large mortgage deposits.
In Cameroon, the FinAfrique firm will hold a training seminar on Islamic finance in Douala, Cameroon’s economic capital. During the event, participants will learn about the history of Islamic finance, financial contracts that conform to Shariah law, the Islamic Development Bank, cooperation between Islamic and conventional banks, and financial markets within the Islamic financial system.

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