posted by Christopher W. Holton Kuwait made a splash with its debut in the international bond market in mid-March, raising $8 billion from regional and international investors following a five-day roadshow in London and three cities in the United States. Demand was high, with more than 778 orders totaling $29 billion, according to officials. The […]
Dana Gas: Shariah Finance’s self-licking ice cream cone
by Christopher W. Holton As we reported earlier this month, the market for Shariah bonds is entering a new crisis as a result of an apparent default by Dana Gas: https://shariahfinancewatch.org/2017/06/15/more-fallout-from-the-dana-gas-sukuk-debacle/ https://shariahfinancewatch.org/2017/06/13/possible-shariah-finance-crisis-brewing-dana-gas-shariah-bonds-declared-unlawful/ Dana Gas is refusing to pay its creditors based on a new decision that its bond offering is no longer Shariah-compliant. This is […]
Saudi Arabia’s Cautious Sovereign Wealth Fund
The Economist provides a bit of insight into the Kingdom of Saudi Arabia’s sovereign wealth fund in the article linked below. Note that the article mentions that the fund invests in bonds. It does not specify sukuk, or Shariah-compliant bonds. It simply says that the fund invests in bonds, which would be decidedly haram… http://www.economist.com/news/finance-and-economics/21602731-kingdom-does-not-splash-cash-other-gulf-states-oil-fuelled-caution […]
Given the heavy hand of Salafist Islam in the Persian Gulf region, this report should come as no surprise… Corporate and infrastructure issuers in the Gulf region may increasingly rely on sukuk, the Islamic equivalent of bonds, as a source of funding in coming quarters says a report titled “Sukuk Are Surpassing Conventional Bond Issuance […]
No doubt SFW readers are very aware that Iran is increasingly finding itself isolated economically and financially due to its nuclear weapons program. If not for Russia, Red China, India, South Africa and a few other nations, Iran would be completely isolated (sarcasm intended unfortunately). Iran is currently looking to raise capital to fund its […]
Some REALLY Bad Ideas on How to Solve America’s Debt Problems
Not surprisingly, the financial jihadists are promoting Shariah as the solution to America’s debt problems. We’ve seen this before. Back in 2008, in the wake of the subprime mortgage debacle and near-financial meltdown, the financial jihadists insisted that Shariah-compliant finance would have avoided the whole mess. Then, in 2009, defaulting on sukuk (Islamic bonds) just […]
Given the rash of sukuk (Islamic bond) defaults which occurred in 2009, it is no surprise that an insurance entity backing sukuk would crop up and one has: The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a division of the Islamic Development Bank (IDB), will soon be tasked with providing insurance on […]
Though the typically cheerleading article linked below doesn’t provide a detailed explanation (no surprise there), Moody’s has assigned a negative outlook on a major Islamic bond offering by a Shariah-compliant bank in the UAE, site of some of the most infamous sukuk defaults over the years… The outlook on FGB’s ratings is negative and therefore […]
The recent notification by Kuwait’s International Investment Group (IIG) KSCC that it was not in a position to make the periodic payments due on July 12, 2010 on its $200 million exchangeable Sukuk (Islamic bond) issued in 2007 and which matures in 2010, once again turns the spotlight on the troubled market. This is the […]
The lure of Islamic bonds appears to be wearing off for borrowers in the Persian Gulf region, with high-profile defaults and rising costs souring their appeal. “Dealing with Sukuk defaults, standardizing Shariah interpretation, and increasing Sukuk liquidity, we believe, are at the root of issues that could curb future growth,” said Mohamed Damak, analyst for […]
The value of bonds and sukuk issued by Gulf oil producers plunged by nearly 32 per cent in the first half of this year and conventional bonds continued to dominate the market. http://www.zawya.com/Story.cfm/sidZAWYA20100801050759/GCC%20bond%20value%20dips%2032%25%20in%20H1
International Investment Group (IIG) of Kuwait said it is unable to pay $152.5 million to sukukholders who demanded immediate repayment after the Kuwaiti finance company defaulted on its $200 million Islamic bond. In April, IIG became the second Kuwait-based firm in a year to miss a sukuk payment. Investment Dar Co., owner of half of […]
The Sukuk (Islamic bond) market has yet to recover from the rash of defaults which hit Shariah Compliant Finance starting with the 2008 financial crisis… http://www.zawya.com/story.cfm/sidZAWYA20100718112801/IFIS%20releases%20H1’2010%20Global%20Sukuk%20Market%20Report%20
Thomas Cook, the British travel concern, failed to place a $50m Islamic aircraft finance bond with investors, highlighting that the market for debt that complies with Muslim law has yet to recover fully from a rash of defaults over the past two years. The planned Islamic bond, properly called sukuk, was to have been the […]
It seems all is not well in the world of Islamic bonds, known as Sukuk. In addition to declining Sukuk subscriptions, we now have news that Indonesia, the most populous Muslim nation in the world, which has rich oil wealth, held a Sukuk auction which was an utter failure. On June 29th, the government of […]
Sukuk “Alert”
Official and private entities in Jordan, Indonesia, Abu Dhabi, Malaysia, Saudi Arabia, Qatar, Dubai, Luxembourg, Sudan, Pakistan, Kazakhstan, Lebanon, Kuwait, Thailand, Islamic Development Bank and General Electric (GE) all are contemplating or planning Sukuk (Islamic bond) offerings in the near future… http://www.bloomberg.com/news/2010-06-22/jordan-indonesia-islamic-development-bank-plan-sales-islamic-bond-alert.html
Indonesia plans to issue a benchmark size global sukuk in October. The sukuk could be about $500 million to $600 million. http://news.asiaone.com/News/Latest%2BNews/Business/Story/A1Story20100615-222221.html
GE Capital has announced that it will offer another Islamic bond (sukuk). The sukuk offerings are not eligible for US markets, so obtaining a prospectus for an offering can be difficult. Nevertheless, SFW was able to obtain such a prospectus after GE’s first foray into the world of Shariah and part of the prospectus does […]
Islamic Bond market forecast to ride “rough patch”
FT’s Robin Wigglesworth continues to exhibit a lack of curiosity when it comes to Shariah finance… http://www.zawya.com/Story.cfm/sid20100414_8473_283
Moody’s: Sukuk To Spread to Japan, Korea and Thailand
The potential emergence of sukuk issuances from such new jurisdictions, including new markets in Asia, notably Japan, Korea and Thailand and Europe, most likely the UK, would be a key driver of increased global issuance… http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=275582
Though The Economist continues to actively ignore many of the fundamental concerns surrounding Shariah-Compliant Finance, the article linked below about the Sukuk market is actually fairly well done, especially when one considers that The Economist has basically been nothing but a shameless cheerleader for Shariah Finance heretofore… The article points out many of the problems […]
Linked below is an article written in a journal of the Wharton school of business at the University of Pennsylvania. It appears to address an issue which is indeed a huge problem in Shariah-Compliant Finance: Lack of Transparency. But appearances can be deceiving. What the Wharton article, which has no author’s name associated with it, […]
Another UAE Sukuk Issuer Looks to “Restructure”
Over the past two years, there have been numerous defaults on Islamic bonds (better known as Sukuk). In fact, default rates on Sukuk are apparently higher than those of conventional bonds. This is likely due to the higher fees associated with Sukuk which are arrived at from a series of convoluted machinations designed to keep […]
Sales of bonds that comply with Islamic laws will remain “weaker” this year as investors shun riskier, higher-yielding assets on concern governments will struggle to repay debt. Sales of the bonds known as sukuk have totalled $564 million so far this year, compared with $2.5 billion for the first quarter last year, according to data […]
The UK Government has proposed new regulations to support Shariah-Compliant Finance and the issuance of corporate sukuk (also known as Islamic bonds). The new regulations, entitled the “Financial Services and Markets Act 2000, Order 2010,” will make the operation of Shariah-Compliant Finance easier in the UK and facilitate the issuance of corporate sukuk. These regulations […]
Standard & Poors Predicts Steady Growth in Islamic Bond Market
In a report published last week, Standard & Poors predicted steady growth in Islamic bond issuance in 2010, with about $20 billion of Sukuk publicly announced in the past likely to come to market if conditions permit. “In addition, we understand from unofficial market sources that about $10 billion more could potentially enter the pipeline. […]
Moody’s Downgrades ANOTHER Sukuk Issuer
Last week reported that Moody’s Investor Services had downgraded a Kuwaiti firm that had issued Sukuk (Islamic Bonds). https://shariahfinancewatch.org/2010/01/27/another-sukuk-issuer-in-deep-trouble/ This weekend we were greeted with the news that Moody’s had downgraded yet another Sukuk issuer, this time a real estate development firm out of Abu Dhabi. If this is a harbinger of things to come, […]
Moody’s Investors Service has downgraded the Corporate Family (CFR) and Probability of Default Ratings (PDR) of Kuwait-based National Industries Group Holding S.A.K. (NIG) and the debt ratings on the USD 475 million sukuk issued by NIG Sukuk Limited to B1 from Ba3. These sukuk are basically “junk Islamic bonds.” So much for the idea that […]
The total debt of cash-strapped Dubai could be as much as 170 billion dollars, much higher than earlier reported, according to a report by EFG-Hermes regional investment bank. This could result in a default from real estate property firm Nakheel on $4.1 billion in sukuk (Islamic bonds). http://uk.biz.yahoo.com/19012010/323/photo/property-giant-nakheel-default-4-1-billion-dollars-islamic-bonds.html? http://www.google.com/hostednews/afp/article/ALeqM5iD24lBQsNXlQXMjk51XSkF3WTdtA
Moody’s Downgrades Qatar Real Estate Sukuk Issuer
Moody’s Investors Service has downgraded Qatar Real Estate Investment Company, which has issued $300 million in Sukuk (Islamic Bonds) from A2 to Baa1. Moody’s also issued an advisory for possible additional downgrading in the future. The move was prompted by the announcement that Qatar Real Estate Investment Company would become a wholly owned subsidiary Barwa […]
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