ESG is on its way to ubiquity because of the operational benefits it can provide to companies. However, its growth comes with the complication of the wide range of information and topics that matter to different stakeholders. For FinTech startups, this presents a risk of diluting focus and making ESG a compliance obligation rather than a business-relevant tool, unless there is a strategy for companies to start by doing a few important things well, and then expanding to new topics.  Bain & Company and EcoVadis, as well as IBM, each released research fin...

It is normal when conventional debt capital bankers interact with Sukuk issuers, but we might end up, unintentionally, introducing new practices that may pose a POTENTIAL Shariah risk. We all know what we call a practice of borrowing at US$95 and repaying at US$100 (after one year). What if an issuer decides to issue Sukuk at a discount (say the price at issue is US$98.77)? Note this is not a Tap.The question is, what would the principal amount be at maturity? There will be no Shariah issue if the principal amount is US$98.77 (at maturity), right? But what if it is not? Say US$100 instead. H...

The International Islamic Trade Finance Corporation (ITFC) and the Islamic Solidarity Fund for Development (ISFD), which are both part of the Islamic Development Bank (IsDB) Group, have signed a USD 150 million agreement for the Trade Finance Support Program using the Mudaraba financial structure, as announced on the 18th of January 2023.  Why it Matters?  The programme is designed to help least developed member countries (LDMCs) that have been impacted by both the COVID-19 pandemic and food security crisis. Additionally, the partnership looks to promote small and medium-si...

The assets of Shariah-compliant banks in the United Arab Emirates (UAE) witnessed a 2.1% annual increase to AED 607.8 billion (USD 166 billion) by the end of October 2022 from AED 595.3 billion (USD 163 billion) in October 2021, according to statistics by the Central Bank of the UAE (CBUAE). Why it Matters? As of October 2022, Islamic banks’ credits increased by 5.7% annually to reach a total of AED 399.1 billion (USD 108 billion), from the AED 377.5 billion (USD 103 billion) recorded in October 2021. Additionally, deposits in Islamic banks also rose by around 1% year-over-...

Qatar Islamic Bank (QIB) reported a 12.7% increase in net profit for the fiscal year 2022, reaching QAR 4.01 billion (USD 1.1 billion) compared to QAR 3.56 billion (USD 978 million) in 2021, as announced by the entity 16th of January 2023.  Why it Matters?  The State of Qatar had a significant year as it hosted the FIFA World Cup 2022. Despite economic challenges, QIB accomplished several accomplishments during the year such as introducing new and unique offerings for customers and companies, as well as expanding its banking operations. The bank maintained its position as the cou...

Indonesia-based PT Indah Kiat Pulp & Paper Tbk (INKP), a subsidiary of Sinar Mas Group, has issued Sustainable Sukuk Mudharabah II phase IV of 2023 worth IDR 675.6 billion (USD 44.7 million).  Why it Matters? Proceeds from the issuance will be utilised for daily operations, such as buying raw materials, production supplies, energy and fuel, finished goods, and indirect expenses. The Sukuk is divided into three series: Series A Sukuk has a face value of IDR 106.88 billion (USD 7.1 million) with a maturity of 370 days; Series B is offered for IDR 501.58 billion (USD 33.2 m...

Global Sukuk issuance is predicted to increase at a moderate rate in 2023 despite market instability and continue to be an important source of funding in key Islamic finance markets, according to Fitch Ratings on the 11th of January 2023. Why it Matters? Sukuk issuance in key markets decreased by 7.9% in 2022 to USD 244.3 billion due to high oil prices, increasing interest rates, and geopolitical issues. Despite this decrease, Sukuk issuance still surpassed bond issuance in these key markets. Medium-to-long term outlook is positive due to strong demand, refinancing needs and gove...

Indonesia-based PT CIMB Niaga Auto Finance (CNAF) has announced the issuance of Sukuk Wakalah Bi Al-Istitsmar I Year 2023 with a total value of IDR 1 trillion (USD 64 million), as per a prospectus published on the 9th of January 2023.  Why it Matters?  The Sukuk will be offered in two series yet the value and yields that each series offers have not been specified. After deducting the costs associated with emissions, all of the funds raised through this Sukuk sale will be put to use as working capital for Shariah financing business activities for automobiles. Details &...

Prospective new sovereign/corporate issuers (in the emerging and frontier markets) often tumble into unchartered territory with debut Sukuk issuances, especially if that jurisdiction of an issuer has never issued an Islamic debt instrument before. There is no easy crash course that can summarise what these prospective issuers can expect as each jurisdiction has its own unique challenges.Here is a summary of the main common challenges and what prospective new issuers should expect with debut issuances:1) RegulationOn the regulation side, issuers need to be mindful of local and internation...