Sukuk Market Overview

The Malaysia-based International Islamic Liquidity Management Corp (IILM) will hold two auctions next week to issue a combined $990 million worth of Islamic bonds (sukuk), under a programme that is now authorised to issue $3 billion in short-term paper. The IILM will auction $490 million worth of three-month sukuk and $500 million of six-month sukuk next Tuesday, the organisation said in a central bank filing. It is only the second time the IILM has issued six-month paper. The IILM programme, rated A-1 by Standard and Poor’s, has $1.85 billion worth of sukuk currently outstanding. The IILM, a consortium of central banks from Asia, the Middle East and Africa, began the programme in 2013 to address a shortage of instruments that Islamic banks can use to manage short-term liquidity. – RTRS Wed, Feb 18

 UK Shariah Consultancy

The Turkish Treasury said on Wednesday it issued a lira-denominated sukuk with a volume of 1.8 billion lira ($736 million). The instrument will mature on Feb. 15, 2017, the Treasury said on its website. With the latest sukuk, the Treasury’s outstanding lira-denominated sukuk amount has increased to 6.8 billion lira. Treasury also has $3.75 billion worth of outstanding dollar-denominated sukuk. – RTRS – Zawya Islamic Wed, Feb 18

Bahrain-based Al Baraka Banking Group is planning on issuing its first Islamic bonds, or sukuk, for its Jordanian unit later this year, chief executive Adnan Ahmed Yousif told Reuters. Jordan Islamic Bank, the oldest of four Islamic banks in Jordan and the largest in terms of assets, is planning a 10-year local currency sukuk by year-end, said Yousif, without giving a size for the transaction. This would mirror deals by Al Baraka units in Pakistan and Turkey which have allowed them to boost regulatory capital as Basel III global banking standards are being phased in around the globe. In December, Jordan Islamic amended its articles of association to allow it to both issue and buy sukuk, as well as to establish special purpose vehicles for such transactions. Authorities in Jordan have taken steps to facilitate sukuk transactions over the past year: In July, regulators introduced long-awaited rules allowing both the public and private sectors to issue sharia-compliant debt. – RTRS – Mon, Feb 16

The Gulf Bond and Sukuk Association (GBSA), the trade association representing the Arabian Gulf fixed income market, has endorsed proposed standard language for collective action clauses and pari passu clauses for sovereign bond contracts. The language would enhance the predictability and orderliness of sovereign debt restructurings by bolstering existing “collective action clauses” through the introduction of a single vote mechanism that would bind all bondholders to a restructuring proposal, as long as 75 percent of bondholders vote in favor. The President of the GBSA, Michael Grifferty, said: “Collective action clauses have demonstrated their value as a means of avoiding long and costly disputes such as that involving Argentina.” Stuart Anderson, Managing Director and Regional Head, Standard & Poor’s Middle East, and Chair of the GBSA Regional Steering Committee, said: “Broad application of this language can strengthen contractual frameworks and further align Middle East sovereigns with global best practice.” The new language was drafted by market participants along with international financial institutions, issuers, academics, and lawyers.

– Press Release – Zawya Islamic Sun, Feb 15

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