Scribd Logo
Upload

Welcome to Scribd!

  • 650 views

    Kuwait - Mohamed Iqbal

    Uploaded by

    Asian Development Bank
    This document summarizes a presentation on recent developments in the Malaysian sukuk (Islamic bond) market. It discusses the evolution of global Islamic finance and capital markets, provides an overview of the Malaysian sukuk market, and highlights some notable recent sukuk issuances. It also covers recommendations to further develop the sukuk market, such as improving regulatory environments, increasing investor diversity and education, and enhancing liquidity and secondary markets.

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd

    Kuwait - Mohamed Iqbal

    Uploaded by

    Asian Development Bank
    650 views18 pages
    This document summarizes a presentation on recent developments in the Malaysian sukuk (Islamic bond) market. It discusses the evolution of global Islamic finance and capital markets, provides an overview of the Malaysian sukuk market, and highlights some notable recent sukuk issuances. It also covers recommendations to further develop the sukuk market, such as improving regulatory environments, increasing investor diversity and education, and enhancing liquidity and secondary markets.

    Original Description:

    Presentation by Kuwait Finance House on Accessing Islamic Finance

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document summarizes a presentation on recent developments in the Malaysian sukuk (Islamic bond) market. It discusses the evolution of global Islamic finance and capital markets, provides an overview of the Malaysian sukuk market, and highlights some notable recent sukuk issuances. It also covers recommendations to further develop the sukuk market, such as improving regulatory environments, increasing investor diversity and education, and enhancing liquidity and secondary markets.

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Download as pdf
    650 views18 pages

    Kuwait - Mohamed Iqbal

    Uploaded by

    Asian Development Bank
    This document summarizes a presentation on recent developments in the Malaysian sukuk (Islamic bond) market. It discusses the evolution of global Islamic finance and capital markets, provides an overview of the Malaysian sukuk market, and highlights some notable recent sukuk issuances. It also covers recommendations to further develop the sukuk market, such as improving regulatory environments, increasing investor diversity and education, and enhancing liquidity and secondary markets.

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Download as pdf
    of 18

    Strictly Private & Confidential

    Asian Regional Public Debt Management Forum


    3-5 November 2009
    Accessing Islamic Finance

    Mohamed Iqbal Mohamed Iqbal


    Head of Treasury and International Business
    Kuwait Finance House (Malaysia) Berhad
    Contents
    ƒIntroduction

    ƒEvolution of the Global Islamic Finance & Capital Markets

    ƒOverview of Malaysian Sukuk Market

    ƒRecent developments in Malaysian Sukuk Market

    ƒOvercoming barriers to liquidity; Securitization, Sukuk,


    Promoting issuance

    ƒLandmark Sovereign Sukuk

    ƒRecommendations for Way Forward


    Introduction
    Islamic Banking and Finance

    •Demand for Islamic banking and finance services has already created
    waves in global markets, as demonstrated by the boom in Islamic finance

    •Although it remains a niche market—there are currently some 300


    Islamic banks and investment firms operating in more than 75 countries,
    managing almost USD 1 trillion worth of funds
    Evolution of the Global Islamic Finance & Capital Markets
    •The Islamic banking and finance industry is undergoing remarkable growth
    •Since the 1970’s, Islamic finance has followed in the wake of innovations in
    the global financial services industry

    Product timeline:

    Source: Stella Cox and Lawrence Oliver


    Page 4
    Evolution of the Global Islamic Finance & Capital Markets

    • Islamic Capital Market


    • The use of sukuks as a fund raising tool has become increasingly
    popular in recent years both for governments and companies

    • Stemmed from the dramatic growth in Islamic banking as a result of


    large inflows of liquidity, primarily oil revenues, into the Islamic world
    and a greater demand among businesses and individuals to conduct
    their finances in a Shariah complaint way

    • Shariah compliant assets now total about USD 700 billion with growth
    in excess of 10% annually during the past decade (S&P).
    Evolution of the Global Islamic Finance & Capital Markets
    • Islamic Capital Market
    • In 2009 up to 30 September there has been 102 deals closed totaling
    USD 13.3billion
    • May 2009 saw the highest sukuk issuance of 16 deals valued at
    USD 2.98billion
    Sukuk Issuance by Country in 2008
    Evolution of the Global Islamic Finance & Capital Markets
    • Islamic Capital Market
    • In 2008, corporates accounted for more than 85% of sukuk issuance
    Evolution of the Global Islamic Finance & Capital Markets

    • Islamic Capital Market


    • By region, MENA accounted for 59% of sukuk issued globally as at 3Q09, dominated by
    Saudi Arabia (44.1%). The remaining 41% of sukuk issues came from other regions led
    by Malaysia (38%)
    • For the first eight months of 2009, a total of 96 sukuks came to market, out of which 66
    deals where sold by governments. Malaysia and Saudi Arabia topped the list of issuers,
    followed by Indonesia and Bahrain (source: Zawya).
    Evolution of the Global Islamic Finance & Capital Markets

    • Islamic Capital Market

    • Sukuk issuance is not limited to Islamic countries and there have been
    issues from institutions in Singapore, Sri Lanka, Canada, Thailand, the
    UK and US.
    • Recently, the second largest bank in Russia, VTB, indicated that it is
    considering issuing a sukuk.
    • Increasingly more countries are now taking steps to amend their
    regulations to facilitate the issuance of sukuks including Japan,
    Germany, Hong Kong, South Korea, France and even Luxembourg.
    Overview of Malaysian Sukuk Market
    • Malaysia’s efforts to develop Islamic banking began more than four decades ago

    • The Islamic finance industry was started with the establishment of the Pilgrim’s Fund Board
    (Lembaga Urusan Tabung Haji) in 1962.

    • The Malaysian model has in fact become a blueprint for many countries developing their
    own Islamic capital markets in the Gulf Cooperation Council (GCC) and in non-Islamic
    jurisdictions

    • Malaysia’s Islamic capital market was given a boost by the 10-year Capital Markets Master
    plan launched in 2001.One of its objectives is to establish Malaysia as an international
    Islamic capital market centre

    • In the pursuit of these objectives, four key strategies have been identified, namely: to
    facilitate the development of a wide range of competitive products and related services; to
    create a viable market for the effective mobilization of Islamic funds; to ensure appropriate
    and comprehensive accounting, tax and regulatory framework; to enhance the value
    recognition of the Malaysian Islamic capital market internationally.
    Overview of Malaysian Sukuk Market
    Government Investment Issues ( GII) and Malaysian Government Securities yield curves
    (spread over 11 months)
    (source :BPAM)
    Recent developments in Malaysian Sukuk Market
    Notable Sukuk Issuances
    Malaysia has firmly entrenched itself as a pioneer in sukuk origination having registered many industry “firsts” in
    recent years.
    Petroliam Nasional Bhd's (Petronas) landmark issuance of US$3.0 billion bond and US$1.5 billion sukuk with
    the designation of "Emas “ –attracted huge demand from investors worldwide-an order book amounting to nearly
    USD 20billion.
    The following are among other notable sukuk issuances in Malaysia:
    source:MIFC
    Overcoming barriers to liquidity;
    Securitization, Sukuk, Promoting issuance

    •Sukuk are securitised assets, hence the need for an underlying tangible asset
    based transaction either in ownership or via a master lease.

    •A properly structured sukuk limits the financing to the value of the underlying
    assets.

    •A transparent investment proposition that spells out full details

    •Curbs speculation, debt issued over debt, and over leveraging on debts

    • Allows the borrowers time for restructuring their debts as it backed by real
    assets

    •Better managed debt exposure as it dictates a limit on amount of debt that can
    be issued.
    Landmark Sovereign /Supranational Sukuk’2009

    •Indonesia Sovereign Sukuk-under Perusahaan Penerbitan SBSN


    –USD 650 million

    •Central Bank of Bahrain- USD 750million

    •RAK Capital-USD 400 million

    •TDIC Sukuk-Abu Dhabi –USD 1billion

    •IDB Trust Services-USD 850million

    •Hilal Sukuk Co. by World Bank –USD 100 million


    Landmark Sovereign Sukuk

    source:IIFM
    Recommendations for Way Forward
    •Regulatory environment
    -Supporting innovation in Islamic finance

    •Investor diversity and education

    •Liquidity and secondary market

    •Well developed primary market

    •Listing-to provide transparency


    -Labuan International Financial Exchange (LFX)
    -Luxembourg Stock Exchange
    -London Stock Exchange
    -Hong Kong Stock Exchange
    -Nasdaq Dubai
    -Dubai International Financial Exchange (DIFX)
    Thank you

    You might also like