CIMB Group Holdings Bhd. (“CIMB”), the top global sukuk underwriter for a fourth year, is seeking to boost its business in the Persian Gulf to fight off HSBC Holdings Plc. (“HSBC”) challenge to its dominance.
The Southeast Asian nation’s second – biggest lender arranged US$3.6 billion (RM11.23 billion) of notes complying with Islam’s ban on receiving and paying interest in 2010 or 23 percent of the total, data compiled by Bloomberg show. Persian Gulf issues made up 3.5 percent of CIMB’s business this year.
The Kuala Lumpur based bank beat HSBC into second place for a fourth year, global sukuk sales totaled US$15.3 billion (RM47.74 billion) so far this year, 24 percent less than in 2009. Sales reached a record US$31 billion (RM96.72billion in 2007).
“We shall be able to do better in 2011,” Badlisyah Abdul Ghani, Chief Executive Officer (“CEO”) of CIMB Islamic Bank Bhd. said on Wednesday. “With the infrastructure developments in Malaysia and Gulf Cooperation Council countries, I anticipate sukuk issuance will be about the same as 2007 or better. We are looking at several deals from the Gulf,” he added.
“A Malaysian government 10 year project led initiative including a nuclear power plant and underground rail network will spur sales of Shari’ah compliant debt next year,” Kuala Lumpur based RHB Investment Management Sdn. Bhd.’s CEO, Sharifatul Hanizah Said Ali, said on December 15.
Saudi Arabian corporates may overtake Malaysia as the largest issuer of Islamic bonds for the first time in 2011 as the kingdom’s 1.44 trillion riyal or US$384billion (RM1.2 trillion) stimulus plan boosts spending. Three of the four underwriters are based in Malaysia and arranged 39 percent of Islamic bond sales this year.
The country’s investment bank have an advantage in the sukuk market as the nation’s issuers account for more than half of the US$144 billion Syari’ah compliant debt outstanding.
Sales by Persian Gulf borrowers in Malaysia surged to RM1 billion this year, the most since 2008 when Gulf firms started tapping the Malaysian, market data show. Last year, RM100 million of debt was sold. Total Islamic bond issuance in the Gulf has declined 32 percent to US$4.5 billion so far this year. - Bloomberg
In the article, Sharifatul Hanizah, RHB Investment Management Sdn. Bhd.’s CEO mentioned that the Malaysian government 10th year project led initiative includes a nuclear power plant and underground rail network which will spur sales of Shari’ah compliant debt next year. What are the sukuk structures that the Malaysian government may use to finance these future projects.