Islamic Finance Week in Review – 24 Feb 2018

Corporate Sukuk Market

The sovereign and corporate sukuk market surged this week, with the stand out corporate issuance coming from Turkey where Al Baraka Turk’s issued a first for Turkey with a Tier 1 perpetual Sukuk facility which is also the first Basel III-compliant publicly-listed Tier 1 issuance. The profit rate was 10%.

In Oman, Golden Group issued a 50 million rials ($130 million) sukuk via a 5-year deal with an annual profit rate of 6.5%.

The Saudi Arabian Mining Company (Maaden) announced that its subsidiary, Maaden Phosphate Company (MPC) had successfully completed the offering of its Shariah compliant sukuk for the amount of SAR 3.5 billion (USD 933,333,000) (consisting of 3500 certificates with a nominal value of SAR 1,000,000 each). The offering was a single class unsecured instrument denominated in Saudi Riyals privately offered to commercial banks and financial institutions.

Sovereign Sukuk

In the sovereign sukuk arena Indonesia printed two sukuk, the worlds first sovereign green sukuk for $1.25bn and a 10 year sukuk for $1.75bn.

Sukuk Indicative Prices

Indicative Sukuk prices from Emirates Islamic Bank for 22^nd Feb 2018.

UK Islamic Finance – Manchester Deal

In the UK, Rosette Merchant Bank has marked its first deal of 2018 with the acquisition of the 149,000 sq. ft Tesco Extra supermarket and an accompanying retail parade in Oldham, Greater Manchester. Based in London, Rosette Merchant Bank is an independent, privately owned Sharia compliant financial services firm with close ties to Kuwait and the rest of the GCC states.

The purchase price was in excess of £50m with over 90% of the income secured against Tesco Stores Ltd with in excess of 16 years unexpired. The property comprises a modern two storey supermarket and convenience District Centre constructed in 2008 for Tesco together with 900 car parking spaces. The lease to Tesco runs until February 2034 with no breaks and benefits from 5 yearly rent reviews to the higher of 2.5% per annum compounded or uncapped RPI.

Islamic Banking Laws

A bill seeking to organize and regulate Islamic banks in the Philippines has hurdled committee level at the House of Representatives. The House panel specifically deliberated on the bill’s feature that mandates a neutral tax treatment between Islamic banking transactions and conventional banking transactions. Only the Philippines and Laos do not have Islamic banking compared to other ASEAN member states.