Association of Southeast Asian Nations (ASEAN) corporates and organisations are seen to have embraced the ESG strategies and practices to enhance their resilience and long-term sustainability while their regulatory authorities have also developed policies and action plans to concur with the sustainable development agenda by 2030, according to a report by Ernst & Young Consulting Sdn Bhd and Capital Markets Malaysia’s (CMM) Sustainable Investment Platform (SIP). Why it Matters? The publication covers 6 countries in the ASEAN region (ASEAN6) that include Indonesia, the Ph...

The global sovereign long-term Sukuk issuance has contracted by 22% to USD 88 billion in 2021, including those by the multilateral banks, according to Moody’s Investors Service (Moody’s). A potential decline in issuance by an additional USD 73 billion in 2022 and USD 75 billion in 2023 is possible as economies rebound. Why it Matters? The rating agency stated that the decline is a sign of improved economic recovery, strengthening fiscal positions and reducing gross financing needs for key Sukuk issuers. A supportive macroeconomic environment, higher oil prices, l...

United Arab Emirates (UAE)’s First Abu Dhabi Bank (FAB) is expected to sell USD 500 million in senior unsecured Sukuk on the 23rd of February 2022 and has begun taking orders. Why it Matters? The issuance represents only the third international issuance out of the Gulf in February. The impending US Federal Reserve introduction of aggressive tightening measures expected in March, compounded by the current diplomatic stand-off in Ukraine, has caused issuers to wait out the rattled debt markets, resulting in slow Sukuk sales out of the Gulf region. High oil prices in 2022 have...

The Takaful insurance industry in the Gulf Cooperation Council (GCC) has displayed broad resilience despite motor and medical claims dropping on the back of COVID-19 movement restrictions, with Saudi Arabia leading the market based on asset size, succeeded by the United Arab Emirates (UAE), Qatar, and Bahrain, according to Alpen Capital. Why it Matters? Takaful insurers saw strong capital buffers in 2020, sustaining a good position as a result of profitable results in the run up to the year. Yet, on the back of lower economic and business activity amid the pandemic and increased co...

Nester, United Kingdom- (UK) based peer-to-peer (P2P) lending platform, has lobbied the tax authority of the UK, Her Majesty's Revenue and Customs (HMRC) for a change in tax rules in order to allow for the launch of its Shariah-compliant Innovative Finance ISA (IFISA), through a submitted draft amendment. Why it Matters? The requested tax changes are in hopes for the better accommodation of Islamic finance in P2P lending and for the treatment of Nester’s Shariah-compliant profit as interest in order for it to receive the same benefits as the conventional interest-based IFIS...

Manulife Investment Management (M) Berhad (Manulife IM) announced the launch of a non-core fund for Private Retirement Scheme (PRS) investors, Manulife Shariah PRS-Golden Asia Fund, to focus on investments in a portfolio of Islamic collective investment schemes (CIS). Why it Matters?The fund hopes to provide retirement savers in Malaysia increased options for growing their retirement assets based on their risk appetite, personal preference and goals, while meeting their Shariah preferences, according to Manulife IM’s Chief Executive Officer (CEO), Jason Chong. Through the fund,...

Turkey has raised USD 3 billion in Sukuk on the 16th of February 2022, in its first US dollar-denominated Sukuk sale since September 2021, prior to its rate-cutting policy.Why it Matters?The 5-year tenured Sukuk were sold at 7.25%, lower than the initial guidance price of between 7.5% and 7.625%. Despite a relatively low pricing to the Sukuk curve and in line with the conventional curve, the order book had remained strong topping USD 10.75 billion. The issuance traded well among investors in the United Arab Emirates (UAE) who flocked to purchase the Sukuk amidst the two countries strengthening...

Saudi Automotive Services Company (SASCO) and Riyad Bank have signed a SAR 504 million (USD 134 Million) Shariah-compliant facilities agreement on the 20th of February 2022, according to a statement released by the company to the Saudi Stock Exchange (Tadawul).Why it Matters?A portion of the financing will be used by SASCO for the acquisition of an 80% stake in Saudi-based NAFT Services Limited Co (NAFT) and hedging against fluctuations in floating interest rates and fixing rates. The deal will be financed using internal sources as well as bank facilities and is expected to reflect po...

The Central Bank of Kuwait (CBK) has recently decided to greenlight the establishment of digital banks in the country, in efforts to support digitisation and stay afloat with global financial services’ latest trends.Why it Matters?CBK’s decision was made after the development of a digital banking framework and undertaking of studies of the relevant best practices of more than 25 central banks and the experiences of 40 digital banks globally. The step allows for the setup of standalone digital banks with no branches that can provide all banking services through online platforms....

Many issuers of sustainability-linked bonds see an issuance premium that exceeds the penalty for missing sustainability key performance indicators (KPIs)Rapid growth of issuance shows appeal of more flexibly labeled bonds, but the market needs to address some structural weaknesses to continue to growMore transparency on KPI target setting, alignment with Net Zero pathways, and adjustment of incentive structures would strengthen the market’s foundations One of the enduring maxims in economics is that there is no such thing as a free lunch. However, the rapid growth of sustainabil...