The 2021 Budget 2021 for Malaysia tabled on the 6th of November 2020 by Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz includes several measures aimed at relieving the COVID-19 burden on individuals in Malaysia. These include easing cash flow issues, addressing cost of living concerns and providing assistance to those who have had their employment or incomes impacted by COVID-19. One area of proposed assistance is the increased scope of the Prihatin Rakyat Scheme (BPR) with a budget allocation of MYR 6.5 billion...

Data from the Ministry of Finance (MoF) as reported in its Economic Outlook 2021 report released on the 6th of November 2020, showed that Malaysia’s Islamic banking industry had grown to a 33% market share as at end-July 2020, with total assets valued at MYR 1.03 billion, and total Islamic finance outstanding at MYR 787.8 billion. According to the MoF, this growth was mainly attributed to financing of residential property purchases amongst the household sector, which increased by 8.7% YoY to MYR 490.9 billion. Meanwhile, Malaysia’s Islamic...

The Impact of Housing Markets on Banks’ Risk-taking Behavior: Evidence From CeseeCredit Risk

RAM Ratings (RAM) has reaffirmed Lebuhraya Kajang-Seremban’s (LEKAS) MYR 633 million Junior Sukuk Istisna’ (2007/2025) rating at C2/Stable.  Malaysian-based highway operator LEKAS holds the concession for the 44-kilometre Kajang-Seremban Highway (the Highway) until May 2039. RAM’s rating reflects the high likelihood of default on the Junior Sukuk as well as its subordination to LEKAS’ other debt obligations such as its Redeemable Convertible Secured Islamic Debt Securities (RCSIDS) and Syndicated Term Loan (STL). According...

Saudi Arabia-based bank, Banque Saudi Fransi (BSF) has announced the completion of its offering of SAR 5 billion worth of SAR-denominated Additional Tier 1 Sukuk on the 4th of November 2020, according to a filing released on the Saudi Stock Exchange (Tadawul).   The Sukuk offering, which was issued through private placement on the 19th of October 2020, has a total number of 5,000 Sukuk based on the minimum denomination and total issue size, with a par value of SAR 1 million and a perpetual maturity.  According to the Tad...

Bahrain’s proposed State budget for fiscal year (FY) 2021-2022 has revealed the Government of Bahrain’s plans to reduce expenditure over the next two years.  Finance and National Economy Minister, Shaikh Salman bin Khalifa Al Khalifa, noted that despite this planned expenditure reduction, the Government has stated its intent to continue refining the quality and efficiency of public services, in order to develop performance and enhance its working mechanisms.  Shaikh Khalifa added that these measures were considered, in order  to maintain social support...

The African Export-Import Bank (Afreximbank), a multilateral financial institution formed by African Governments and institutional investors, has partnered with the International Islamic Trade Finance Corporation (ITFC), the trade finance arm of the Islamic Development Bank (IsDB) Group, as well as the Arab Bank for Economic Development in Africa (BADEA) to launch a USD 1.5 billion Collaborative COVID-19 Pandemic Response Facility (COPREFA).  According to a statement issued by the ITFC on the 4th of November 2020, COPREFA is designed to support...

Climate-related financial risks are the largest source of unpriced financial risks facing banks and investorsFinancial institutions have the ability to affect production linked to GHG emissions as well as demand, which provides them a unique leverage point to manage their own risksThere’s an opportunity for competitive advantage for financial institutions that analyze their risk from financed emissions, while laggards will face growing investor and regulatory pressure Climate-related risks have become one of the most significant sources of unpriced risk facing the financial sect...

Indonesia has officially fallen into recession for the first time in 22 years since the 1998 Asian financial crisis, as its economy contracted in the third quarter of 2020 (3Q 2020) in the wake of the COVID-19 pandemic.  According to Statistics Indonesia, locally known as Badan Pusat Statistik (BPS), Indonesia’s gross domestic product (GDP) contracted by 3.49% year-on-year (YoY) in 3Q 2020, following a 5.32% YoY GDP decline in the second quarter of the year (2Q 2020). On a quarterly basis, the Indonesian economy rebounded 5.05% quarter-on-quarter (QoQ) during July to Sep...

RAM Ratings (RAM) has reaffirmed the AA2/Stable rating of Edra Solar’s MYR 245 million ASEAN Sustainability SRI Sukuk. The reaffirmation reflects the strong operating performance of Edra Solar’s 50 MWac solar photovoltaic plant situated in Kuala Ketil, Kedah, which forms the basis of the company’s strong debt coverage that is backed by a 25-year power purchase agreement with Tenaga Nasional, which is rated AAA/Stable by RAM.  According to RAM, Edra Solar has faced minimal issues with insignificant outages since the completion of the p...