On the 6th of July 2021, Pakistan launched USD 1 billion worth of Eurobonds with a subscription price worth USD 3 billion for five, ten and thirty years. This issuance comprised USD 300 million in five-year bonds at 5.875%, USD 400 million in 10-year bonds at 7.125%, and USD 300 million in thirty-year bonds at 8.450%.   Why it Matters? The main aim of this funding is to support Pakistan’s foreign exchange reserves. The Government o...

Garuda Indonesia (Garuda)’s June 2021 default on its USD 500 million Sukuk could provide clarity on Sukuk restructuring, resolution and enforceability in Indonesia, according to Fitch Ratings.  Why it Matters?  Amongst countries where Sukuk issuance is common, notably Indonesia, legal precedence for effective enforcement is deemed deficient. Further, Shariah involvement may make resolving Sukuk defaults more difficult than resolving bond defaults. Garuda’s capital structure adds to the complexi...

Rania A Al-Mashat, Minister of International Cooperation of Egypt met with Ayman Amin Sejiny, Chief Executive Officer and General Manager at Islamic Corporation for the Development of the Private Sector (ICD), to discuss possibilities of future cooperation in the backdrop of the economic challenges posed by COVID-19. The challenges highlight the importance of refocusing on the development of the private sector. The meeting also emphasised the longstanding relations between Egypt and the ICD. Why it Matters? ...

The Emirate of Sharjah, in the United Arab Emirates (UAE), made its second international bond sale for 2021 on the 6th of July 2021, selling USD 750 million in 10-year Sukuk, in its efforts to shore up its finances on the back of COVID-19. According to media reports, the Islamic bonds were sold at 3.2% (tightened by 30 basis points from the initial price guidance), after the Sukuk brought in over USD 2.75 billion in orders.   Why it Matters?  The Sukuk was issued despite governments in the hydroc...

The Astana International Financial Centre (AIFC) has signed a Memorandum of Understanding (MoU) with the International Islamic Food Processing Association (IFPA) to promote Islamic finance investment into agri-food projects in Kazakhstan, according to a statement issued on the 3rd of July 2021.  Why it Matters?   The MoU defines the framework for future cooperation between AIFC and IFPA and will leverage strengths of the parties involved to support high-quality and sustainable development outcomes in agri-food projects in Kazakhstan with in...

S&P Global Ratings (S&P) forecasts further consolidation within Malaysia’s Islamic banking sector, as the growing trend of consolidating companies and resources into the hands of larger firms continues.  Why it Matters?  In the past 10 years, Islamic banks in Malaysia have remained a primary driver of credit expansion amongst Malaysian banks, with this trend not expected to change despite the effects of the COVID-19 pandemic. According to a report by S&P issued on the 5th of July 2021, Islamic bank...

Maybank Investment Bank has lowered its 2021 growth forecast for Malaysia’s gross domestic product (GDP) to 4.2% from its previous estimate of 5.1%. According to Suhaimi Ilias, Chief Economist at Maybank Investment Bank, the downward revision considers the heightened lockdown and restriction measures imposed within the country to slow the spread of COVID-19.  Why it Matters? Malaysia still remains in Phase 1 of the four phase-National Recovery Plan, as the required conditions to m...

In a statement issued on the Dubai Financial Market on the 5th of July 2021, the Bank of Bahrain and Kuwait (BBK) and Ithmaar Holding have agreed to abandon plans for the potential acquisition of Ithmaar Bank’s Bahrain-based operations by the former.  Why it Matters?  The two entities signed a Memorandum of Understanding (MoU) in September 2020 to confirm their plans for the potential acquisition by BKK of Ithmaar Bank’s Bahrain-based operations, along with specific assets of IB Capit...

Set to open up in Lagos, Nigeria, Lotus Bank is expected to start operations in July 2021, making it the first non-interest bank to operate out of the South-west region of the country. Lotus Bank was granted a non-interest banking licence by the Central Bank of Nigeria in June 2021.   Why it Matters?  With the global Islamic finance industry currently valued at USD 2.2 trillion and expected to grow to USD 4.0 trillion by 2022, Hussein Hassan, Global Managing Director of Islamic Banking at JP Morg...

With low interest rates and abundant liquidity, S&P Global Ratings believes that market conditions will remain favourable for Sukuk issuance in the second half of 2021 (2H 2021). This is founded on the expectations that most Islamic finance countries would continue vaccinating their populations and oil prices would stabilise at about USD 65 per barrel for 2021. Sukuk issuance totalled USD 90.6 billion in the first half of 2021 (1H 2021), higher than the USD 86.4 billion during the same period in 2020.  Why it Matters? ...