Nakheel sukuk, Khazanah exchangeable sukuk in 2010, US Islamic mutual fund and ETF launching

Nakheel's $3.52 billion sukuk traded at 107, its highest value since doubts emerged about the ability of Nakheel and Dubai World, which guarantees the sukuk, to repay. The rising price indicates that there is greater certainty that Dubai will ensure the sukuk is redeemed at maturity. The redemption value includes principal plus deferred lease payments, so the redemption value is greater than par. A blog post at The National notes that the sukuk is an unsecured obligation of the company, something that is clear in the prospectus but which had been questioned following the reported transfer of properties from Nakheel to Istithmar.

Khazanah Nasional plans more exchangeable, USD-denominated sukuk next year to reduce its stake in several of its holdings. Khazanah issued an exchangeable sukuk a couple years ago backed by shares of Telekom Malaysia. The sukuk was structured where the common shares were the assets on which the sukuk was based and the profits paid to investors were covered by the dividends paid on the common shares. The investors in the sukuk were able to later exchange their sukuk into shares of Telekom Malaysia.

The United States Islamic investment market is getting a lot deeper as Saturna Capital launched its Amana Developing World Fund and ShariahShares ETF should be launched in Q1 of 2010, managed by California-based Florentez Investment Management. The new Amana Fund will be invested in developed country-based companies with significant revenue from international operations. The ShariahShares ETF will likely include two passively-managed funds, one based on the FTSE Yasaar Shari'ah U.S. Index and the other on FTSE Yasaar Shari'ah Developed World ex-U.S.

In another sign that the sukuk market is still very undeveloped for longer maturity sukuk, even from sovereign issues, the Indonesian regular sukuk will likely have less than 15 years maturity. The Finance Ministry director in charge of Islamic markets told Reuters that "The maturity of the sukuk will likely be shorter [than 15 years because] the sukuk market is still not yet developed".

Other News

• There is a good summary of the French legal changes to accommodate Islamic finance in the country, specifically the changes relating to murabaha and sukuk.
  
• A few sovereign sukuk issues will come next year including Indonesia, Pakistan and South Korea. Not to mention the potential for the U.K., Singapore, Hong Kong and the Japan Bank of International Cooperation, which could also come next year.
  
• An American firm developed a 'longevity-linked investment platform'.
  
• Rushdi Siddiqui, the global head of Islamic finance for ThomsonReuters, recreated the Palm Jumeirah in his garden.
  
• A new Islamic investment firm, Fajr Capital, launched with shareholders including Malaysian Khazanah Nasional, Brunei Investment Agency and the Abu Dhabi Investment Council.
  
• The CEO of Unicorn Investment Bank discusses the investment bank's growth.
  
• Daimler Financial will offer Shari'ah-compliant financing in the UAE.
  
• The Kerala government in India will finance infrastructure projects and other investment opportunities through a Shari'ah-compliant investment company.
  
• Syria is seeing growth in takaful.
  
• The merger between Amlak and Tamweel, two troubled Islamic mortgage firms will 'take time' according to UAE central bank governor Sultan Nasser al-Suweidi.
  
• Bahrain Financial Exchange launched two product development working groups, one devoted to developing Shari'ah-compliant products.
  
• The Managing Director for the MENA region for Boeing says there will be growth in Islamic finance including in aircraft finance.
  
• The Qatar Investment Authority and Malaysian Khazanah Nasional Bhd are working to set up a joint investment fund.