---------- Forwarded message ----------
From: ICG Events <[email protected]>
Date: Tue, Jul 7, 2015 at 6:13 PM
Subject: 2015 Sukuk Summit Stresses Initiatives to Take Sukuk Origination
to the Next Level through Sustainability, Innovation, Overcoming Regulatory
and Other Challenges
To: "[email protected]" <[email protected]>
GLOBALISING SUKUK BEYOND TRADITIONAL MARKETS,
STRUCTURES & ASSET POOLS'
2015 Sukuk Summit Stresses Initiatives to Take Sukuk Origination to
the Next Level through Sustainability, Innovation, Overcoming Regulatory
and Other Challenges
In an environment of excess liquidity in core markets and the encroaching
impact of capital and liquidity requirements under the new Basel III
Concordat, the proliferation of Sukuk issuances led especially by
Sovereigns both from traditional and new markets continues unabated.
The sustainability of Sukuk beyond the US$100 billion mark in 2015 seems
assured given that in the first five months of this year the volume of
primary issuances had already surpassed US$33.7 billion. According to
Standard & Poor's (S&P). If we add the spate of issuances led inter alia by
sovereign Hong Kong and Indonesia, and by The Saudi British Bank and Dubai
Islamic Bank, then the figure pre-Ramadan is nearer to the US$45 billion to
US$50 billion mark.
All these developments offer encouraging opportunities for the maturing and
sustainable global and domestic Sukuk market, which these days is also
highlighted by exciting new innovation in structures and in terms of
Shariah governance. This was the overriding message to emerge from speakers
at the 2015 London Sukuk Summit, which was held on the 3rd and 4th June at
the Jumeirah Carlton Tower, under the pertinent theme: 'Globalising Sukuk
Beyond Traditional Markets, Structures &Asset Pools'.
Setting the scene for the inaugural keynote session, Mushtak Parker, the
session Chair, highlighted the various developments in the global market
over the last year. These include a spate of sovereign issuances (both
international and domestic); corporate issuances (one again in the
international and local currency markets); the increasing origination of
Sukuk in the aviation sector highlighted by the recent US$930 million
issuance by Emirates Airlines backed by a guarantee from the UK Export
Finance, the export credit agency of the UK Government and the US$500
million Sukuk by Garuda Indonesia; the increased US$10 billion Islamic
Development Bank Sukuk Programme for 2015 and beyond; the various
developments in terms of regulatory and prudential standards under the
Basel III regime; the role of Sukuk in liquidity management; the
consolidation of the Malaysian International Islamic Financial centre
(MIFC) as a Sukuk origination platform with the issuance of the latest
Sukuk by Kuveyt Turk Participation Bank; the continued buoyancy of the
three largest markets - Malaysia, Saudi Arabia and the UAE - especially
with new entrants including Noor Bank; the issuance of the first SRI Sukuk
under the new Sustainable and Responsible Investment (SRI) Sukuk Regulatory
Framework of the Securities Commission Malaysia (SC) by Khazanah Nasional
Berhad; and of course the inclusion of Sukuk and Infrastructure on the
agenda of the upcoming G20 Summit in Antalya, Turkey in November this year.
The keynote speakers comprised Jeremy Fern, Head of City Affairs - Economic
Development Office, Corporation of London and a member of the UK Government
Task Force on Islamic Finance; Jaseem Ahmed, Secretary General of the
Islamic Financial Services Board; Prof. Datuk Rifaat Ahmed Abdel Karim, CEO
of the International Islamic liquidity Management Corporation (IILM); and
Dato' Dr Nik Ramlah Mahmood, Deputy CEO, the Securities Commission Malaysia.
Mr Fern highlighted the current status of the UK proposition on Islamic
finance and the encouraging developments since the issuance of the
country's debut GBP200 million Sukuk in 2014. The UK and the City of London
is serious about consolidating London into a major centre for Islamic
finance, investment and trade.
Indeed, following the re-election of the Conservative Government in May
this year, and the appointment of Sajid Javid as the new Secretary of State
for Business & Enterprise, there would be continuity in the UK Islamic
finance proposition. Mr Javid of course was the Financial Secretary to the
Treasury in the erstwhile Coalition Government under whose watch much of
the work for the UK's debut Sukuk was done and the go-ahead for the
ECA-backed Emirates Sukuk was given. Mr Javid also oversaw the
establishment of GIFIG during the World Islamic Economic Forum (WIEF) in
London in 2013.
Secretary General, Jaseem Ahmed highlighted the rapid growth of the Islamic
financial services industry (IFSI) post the global financial crisis. The
Islamic banking sector, he revealed, expanded at a CAGR (compound aggregate
growth rate) of 16.04% during 2008-2014; Sukuk issuances and outstanding
grew at a CAGR of 33.9% for the same period; Takaful contributions are
estimated to reach US$21.4 billion as at First Half 2014. Not surprisingly,
the Sukuk sector has replaced the Islamic banking sector as the fastest
growing industry segment on a pure growth basis.
The industry development is also encouraged by the emergence of large
Islamic finance sectors in key economies. For instance, Sudan, Saudi
Arabia, Kuwait, Yemen, Brunei, Qatar, Malaysia and Bangladesh are among
markets where Islamic finance has near systemic importance. But, deep
seated reforms are underway in jurisdictions where this sector is still
small.
The growth trends for Sukuk are encouraging too surpassing the US$100
billion market for the last three years. In 2014 Sukuk issuance totalled
US$118.8 billion, almost the same as in 2013, and global Sukuk outstanding
reached US$300.3 billion in 2014. During 2014, sovereign and
quasi-sovereign Sukuk were issued in a record 12 countries, with five debut
issuers. He commended the increasingly diverse role played by Sukuk
especially in infrastructure funding and more recently the emergence of
socially-responsible Sukuk. Sukuk is also a potential source of funding as
well as of high quality liquid assets.
He also discussed the latest developments in the Global Financial Reform
Agenda including the coordinating work the IFSB is doing with international
standard setters such as the Basle Committee for Banking Supervision,
IMF/Financial Stability Board (FSB), IOSCO and the IAIS. The IFSB is
interested in the orderly growth of the IFSI and the promotion of its
stability with the global financial system and the economies of the host
countries. The Board has issued seven key standards over the last few years
including the Core Principles for the Supervision of Islamic Banking and a
Guidance note on Quantitative Measures for Liquidity Risk in April 2015.
The latter two presents immense challenges for the Islamic finance
industry, especially a lack of high quality liquid assets (HQLA), whereby
qualifying highly-rated Sukuk have been included for the first time under
the Liquidity Coverage ratio (LCR) of the Basel III process.
He stressed the need for regular sovereign Sukuk issuances including
short-term offerings by central banks, albeit the availability of HQLA will
improve especially through the short-term Sukuk issuance programme of the
IILM.
Indeed, the lack of short-term liquidity management instruments for the
IFSI was aptly highlighted by Prof Rifaat Abdel Karim of the IILM, who
stressed the challenges and increased demand for such instruments by
Islamic banks the world over.
The IILM was specifically established in 2011 as a multilateral institution
to facilitate the above through short-term US dollar denominated Sukuk
issuance, which are backed by a minimum single 'A' rated sovereign assets,
which in turn underpins the credit quality of the underlying asset pool.
Thus far IILM Sukuk outstanding is US$1.85bn, and since its first issuance
in 2013, a total of US$9.98 billion Sukuk have been issued and reissued by
IILM after auctions.
Despite the fact that IILM is not rated, S&P has assigned a 'A-1' rating to
the IILM's short-term Sukuk programme, which according to the Corporation,
is a landmark rating because, inter alia, it combined aspects of structured
finance rating methodology with Sukuk distribution channels that were more
akin to how central banks distribute their own short-term papers.
Going forward, the Corporation will explore new avenues to support enhanced
liquidity management and financial stability for Islamic financial
institutions, but the work of the IILM is not enough to address all the
liquidity management needs of the IFSI or to protect against future
liquidity stress for Islamic banks.
Dr Nik Ramlah of the Securities Commission discussed recent regulatory and
market developments, stressing that in 2014 Malaysia accounted for 66% of
global Sukuk issuance 57% of Sukuk outstanding. The Malaysian Islamic
capital market is now worth RM1.64 trillion with an annualized growth rate
of 12% over the last five years.
The drivers of innovation in the Sukuk market is to keep pace with the
sophistication of the global financial market; to achieve the true
objective of Maqasid al Dhariah; and to ensure the link with the real
economy. The Malaysian Capital market Master Plan (CMP2) recognized the
role of capital market in mobilising investments for sustainable
development and the increasing convergence between ethical and Islamic
finance, given that socially responsible investment is also gaining
traction globally. Other innovations in the Sukuk market included
Structured Covered Commodity Mudharabah Sukuk, Basel II Compliant Sukuk and
Exchangeable Sukuk.
Perhaps the most socially edifying Sukuk in 2015 is the RM300 million SRI
Sukuk issued in May by Khazanah Nasional Berhad, the Malaysian sovereign
wealth fund, via a Malaysian-incorporated independent special purpose
vehicle, Ihsan Sukuk Bhd, under its RM1 billion Sukuk programme. The RM300
million issuance is the first tranche under the Programme and the first
such Sukuk approved under the SC's Sustainable and Responsible Investment
(SRI) Sukuk framework.
The proceeds of this Sukuk, according to Khazanah, will be channelled to
Yayasan AMIR, a non-profit organisation initiated by Khazanah in 2010, to
manage its cashflow for the deployment of its Trust Schools Programme under
its financial and social inclusion initiative.
There were of course several robust sessions on various aspects of the
Sukuk industry by speakers from NBAD, S&P, CIMB Islamic, Amanie Advisers,
the Debt management Office of the Government of Sharjah, Rasameel
Structured Finance, DDCAP Group, Oasis Group, Trowers & Hamlins, UK Export
Finance, the London Stock Exchange, Cagamas Berhd, KFH Investment, Path
Solutions, the Capital markets Board of Turkey, GIB, FWU Group and BLME.
The Summit culminated in the regular annual Shariah Scholars & Issuers
Panel Discussion, which highlighted Shariah governance issues; the Shariah
view of 'hold to maturity' by Sukuk holders and whether that constituted
hoarding; implications of non-Shariah-compliance risk; and creating the
conditions for future innovation in the Sukuk market.
For further information on the Summit please visit www.sukuksummit.co.uk
<http://benchmark.bmetrack.com/c/l?u=54C6335&e=788238&c=831B5&t=0&l=B3A8FC5&email=kdavO%2BM64KTvoouBnIlWpwif8GG0Zxj9>
or contact [email protected]
*Sponsors*
*Endorsers*
*Partners*
View this email in your browser
<http://benchmark.bmetrack.com/c/v?e=788238&c=831B5&t=0&l=B3A8FC5&email=kdavO%2BM64KTvoouBnIlWpwif8GG0Zxj9>
--
--
You received this message because you are subscribed to the Google Groups
"Kantakji Group" group.
To post to this group, send email to [email protected]
To unsubscribe from this group لفك الاشتراك من المجموعة أرسل للعنوان التالي
رسالة فارغة, send email to [email protected]
For more options, visit this group at
http://groups.google.com/group/kantakjigroup?hl=en
سياسة النشر في المجموعة:
ترك ما عارض أهل السنة والجماعة... الاكتفاء بأمور ذات علاقة بالاقتصاد الإسلامي
وعلومه ولو بالشيء البسيط، ويستثنى من هذا مايتعلق بالشأن العام على مستوى
الأمة... عدم ذكر ما يتعلق بشخص طبيعي أو اعتباري بعينه باستثناء الأمر العام الذي
يهم عامة المسلمين... تمرير بعض الأشياء الخفيفة المسلية ضمن قواعد الأدب وخاصة
منها التي تأتي من أعضاء لا يشاركون عادة، والقصد من ذلك تشجيعهم على التفاعل
الإيجابي... ترك المديح الشخصي...إن كل المقالات والآراء المنشورة تُعبر عن رأي
أصحابها، ولا تعبّر عن رأي إدارة المجموعة بالضرورة.
---
You received this message because you are subscribed to the Google Groups
"Kantakji Group" group.
To unsubscribe from this group and stop receiving emails from it, send an email
to [email protected].
To post to this group, send email to [email protected].
Visit this group at http://groups.google.com/group/kantakjigroup.
For more options, visit https://groups.google.com/d/optout.
