Fitch Ratings (Fitch) has downgraded Malaysia-based energy service provider Serba Dinamik Holdings Berhad’s (SDHB) Long-Term Issuer Default Rating (IDR) to ‘B-’ from ‘BB-’. Concurrently, Fitch has downgraded SDHB’s senior unsecured Sukuk (due 2022 and 2025) to ‘B-’ from ‘BB-’ with a Recovery Rating of ‘RR4’. In addition, the ratings have been placed on Rating Watch Negative (RWN).  Ratings Rationale The downgrade reflects the constraints on SDHB’s liquidity and in...

The impacts of COVID-19 have contributed to countries in the Maghreb region not meeting the expected levels of the United Nations’ Sustainable Development Goals (UN SDGs), in addition to exacerbating the already weak state of the countries in question. COVID-19 has also highlighted the need for Islamic financial institutions (IFIs) to leverage fintech via the integration of social, environmental and economic development into their business models. Why it Matters?  The integration of sustainability models into the strate...

The Government of the Republic of Indonesia has returned to its annual Global Sukuk market with the successful issuance of a triple-tranche Sukuk totaling USD 3 billion on the 2nd of June 2021. The Reg S/144A issuance comprised of a USD 1.25 billion five-year tranche priced at par to give a final profit rate of 1.50%, a USD 1 billion 10-year tranche at 2.55%, as well as a Green Sukuk issuance worth USD 750 million with a 30-year tenure, priced at 3.55%. The Sukuk, structured under...

Brunei’s Minister of Home Affairs, Pehin Orang Kaya Seri Kerna Dato Seri Setia (Dr) Awang Abu Bakar Apong, has highlighted the capacity of Islamic finance to invigorate socio-economic development, as the financial returns generated from it entail positive social and environmental pacts as well.    Why it Matters?  The Minister elaborated that the potential for more innovative solutions and opportunities in Islamic finance lies largely untapped; in particular, in the Islamic capital market s...

There’s no denying the primary role of the financial markets is to drive economic gains, however; over recent years the financial sector is under huge pressure from governments, investors, individuals to not just focus on profit, but to align international financial systems to a more purposeful and natural ecosystem.  According to the 2020 Schroders Global Investor Study report, sustainable investing is becoming very important, particularly to investors around the world.  Respondents confirm that their values increasingly drive their investment decisions ...

According to media reports, Saudi Aramco is planning to re-enter the global capital markets with a Sukuk issuance of around USD 5 billion. Whilst a decision has not been reached, the funds may be raised through both USD and local currency Sukuk, with the transaction being put off if market conditions deteriorate.   Why it Matters?  The funds will go towards fulfilling a USD 75 billion dividend commitment due to the Government of Saudi Arabia. Almost all of the pay-outs made by the state-controlled firm go to the Government of Saud...

Fitch Ratings (Fitch) has assigned a BBB rating to Indonesia's USD sovereign global certificates (sukuk) issued via Perusahaan Penerbit SBSN Indonesia III (PPSI-III). Amongst these, one of the maturities is a green Sukuk with the proceeds going towards the financing or refinancing of expenditure directly related to eligible green projects, as the Government of Indonesia's Green Bond and Green Sukuk Framework. Ratings Rationale The rating of the Sukuk is driven&n...

According to data released by Oman’s National Centre for Statistics and Information (NCSI), the total number of Small and Medium Enterprises (SMEs) registered in Oman’s Authority for Small and Medium Enterprises Development (Riyada) till the end of April 2021 was recorded at 52,524. This reflected 19% year-on-year (YoY) growth, compared to total SME registrations of 44,139 in April 2020. Why it Matters?  This is the highest recorded monthly YoY growth for 2021. Emphasising the importance of SMEs within the Omani e...

The Government of Indonesia has committed to sustainable development that addresses burning issues such as climate change, environmental sustainability and disaster mitigation. The President of Indonesia, His Excellency Joko Widodo, has pledged to reduce greenhouse gas (GHG) emissions by 29% by 2030. To fund these planned developments, the Government is looking at Shariah-compliant innovative financing.  Why it Matters? Several methods, such as the Green Sukuk, the establishment of SDG Indonesia One, and the establishment of the Environmental Fund Ma...

Loan growth in Malaysia’s Islamic banking sector is anticipated to double to at least 10-12% year-on-year (YoY) in 2021, surpassing the expected Malaysian banking sector loan growth which is forecast at 6% YoY for 2021, up from 3.4% in 2020. Overall banking sector growth in Malaysia is expected to be predominantly led by Islamic banks, which have been growing at a strong pace in the past decade, according to S&P Global Ratings.  Why it Matters?  Financing growth for Islamic banks is to be led by household credit, su...