Saudi National Bank (SNB) has announced that it has completed the issuance of SAR 3.3 billion (USD 878 million) additional Tier 1 Perpetual Sukuk denominated in Saudi riyals, in an effort to improve its capital base, as per a bourse filing on the of 15th of September 2022.  Why it Matters? The offer, which had a par value of SAR 1 million (USD 266,120), began in late August 2022 and comprised a total of 3,300 bonds. The Sukuk are priced at 5%, and if they are not redeemed or purchased by the 15th of September 2027, or earlier, the rate of return will be reset on that date an...

Sukuk issuances totalled USD 188 billion in 2021 compared to USD 175 billion in 2020, with a quarter of the issued Sukuk being international offerings and domestic issuances accounting for the remainder, according to the 11th Edition of International Islamic Financial Market’s (IIFM) Annual Sukuk Report. Why it Matters? The Sukuk market is still highly concentrated, with four top nations accounting for 88.5% of all issuances, despite the constant emergence of new jurisdictions. 12,778 Sukuk worth USD 1.6 trillion were issued internationally over the past 20 years, with Malaysia issui...

Adoption of open banking by financial institutions, Governments, fintechs and other stakeholders is expected to increase by 2025 Open banking will enable the offering of more innovative products and lead to greater use of fintech solutions.  This research was conducted among 346 leading Islamic finance professionals working across sectors by IslamicMarkets.com during August 2022.  The Islamic finance sector is expected to move rapidly towards greater use of open banking over the next three years, according to a recent study.  The research undertaken by...

The lack of transparency around financial institutions’ Net Zero targets and disclosures for portfolio alignment leaves a big opportunity for greenwashing. This could be addressed with better guidance on portfolio alignment metrics, as contained in a recent Glasgow Financial Alliance for Net Zero (GFANZ) report.  Financial institutions are being given substantial leeway on how to define their alignment with national Net Zero emissions targetsThis presents a loophole that could enable greenwashing unless more clarity is required on what makes for a credible Net Zero target or di...

Gulf Cooperation Council (GCC) syndicated loans (Islamic and conventional) had one of the strongest years in 2021.The total of GCC syndicated loans (denominated in US dollars) that was raised in 2021 reached a total of USD 104.4 billion, compared to USD 68.6 billion raised in 2020, according to Refinitiv.It should be noted that the number of deals has significantly increased from 54 in 2020 to 80 in 2021, according to Refinitiv data. Debt DealsWhat is more surprising to market observers was the fact that GCC borrowers preferred syndicated loans in 2021 (this came on the account of f...

The Private Department of Sheikh Mohamed Bin Khalid al-Nahyan LLC (PD), a United Arab Emirates- (UAE) based real estate firm, is resuming plans to offer benchmark-sized three-year Sukuk denominated in US dollars as shown in bank documents on the 12th of September 2022. Why it Matters? PD originally intended to raise USD 600 million in July 2021, but instead decided to size the deal at USD 350 million and then withdrew the deal after it launched and before pricing. The company would have likely faced a rating drop if the deal had closed at the indicated magnitude. Sheikh Moha...

Global sukuk issuance is anticipated to witness a decline from USD 181 billion in 2021 to between USD 160 billion and USD 170 billion in 2022, according to Moody’s Investors Service. Why it Matters?  The decline is anticipated since major sovereigns that issue Sukuk have improved budgetary circumstances as a result of higher oil prices and higher interest rates. Given the uncertainty of interest rates during the first half of 2022, some issuers, including corporations and financial institutions, have delayed their Sukuk sales. As major central banks continue to raise i...

Malaysia Building Society Berhad (MBSB) and Malaysian Industrial Development Finance Berhad (MIDF) are expected to submit a comprehensive merger proposal to the Central Bank of Malaysia, Bank Negara Malaysia (Bank Negara) in September 2022, paving the way for the nation's first merger of domestic financial institutions since November 2021.  Why it Matters? The merger, if completed, will make MBSB the nation's second-largest standalone Islamic bank by assets behind Bank Islam Malaysia Berhad (Bank Islam). The parties were given permission to begin merger talks by Bank Negara...

Regulators are sending a message by doing climate stress tests that using incomplete data and simple methodologies is preferable to doing nothing. Financial institutions that acknowledge that climate change is having a financial impact on them and that this will grow in the future should take the same approach.  Climate stress testing is going mainstream, with 31 regulators having completed or begun one, so banks need to keep up their work on climate-related risksFinancial institution (micro-level) climate risk metrics measure different things than regulatory (macro) climate stress t...

The Government of Pakistan expects to raise PKR 1.5 trillion (USD 6.6 billion) through Ijara Sukuk against a variety of assets, primarily public sector projects in the financial year 2022-23 (FY23). Why it Matters? With the issuance of USD 600 million in Sukuk, Pakistan first entered the global Sukuk market in 2005 and in 2008, the domestic Sukuk programme was introduced. After almost three years, the Ministry of Finance actively brought the programme back in 2020. As a result, the government locally issued Ijarah Sukuk worth more than PKR 2.315 trillion (USD 13 billion) bet...