Sovereign sukuk issues, other news

There have been no benchmark sovereign sukuk issues this year, according to Reuters. Malaysia is considering issuing a global sukuk to provide a benchmark for local sukuk issuance. A benchmark issue is usually over $500 million. The lack of sovereign sukuk comes despite the intentions of a number of countries including the UK, Jordan, Kazakhstan, the Philippines, Indonesia that have stated that they plan to issue sovereign sukuk. Three months into the year, I am not too worried that there will be no sovereign sukuk issues for the year, especially with a smaller (~$100 million) Indonesian sukuk issuance planned for March 30. However, there are still risks. Greece and Dubai were the flash points of the fall and both could shake emerging market credit markets if there are further problems and Portugal's downggrade could also make it harder for emerging market countries to tap the international credit markets. However, the scale of the issuance by countries across the emerging markets, not to mention the developed world like the UK, dwarf the size of a benchmark sukuk issue. The more important point is that many emerging markets (where most of the sukuk pipeline is coming from) are consumed with dealing with the economic recession and do not have the time to deal with the legal and regulatory issues to make a sukuk issue possible. Reuters has a factbox about possible and planned sovereign sukuk issues.

Yasaar Media launched the first issue of "So Far? The Journal of Strategic Thinking in Islamic Finance". I was one of the think tank members contributing my views on the sukuk market and I would recommend it as a source of critical and strategic thinking into the Islamic finance. The current issue delves into the problems of the sukuk market recently. The first issue is available from Yasaar Media's website as a pdf

Malaysia strengthened its rules for Shari'ah board's review process to implement more transparency and documentation in the process. Not having read the rules, I cannot say for sure, but it appears that the rules would be at least in part in harmony with the call for greater Shari'ah transparency by Dr. Mohamed Elgari, which I linked to on Monday.

An article discusses the prospects of Islamic finance becoming involved with rainforest preservation in Indonesia.

A couple articles. discuss the prospects for a Dubai World restructuring proposal expected soon.

The managing director for Islamic finance at Global Commodity Finance says that the central banks in the Gulf region should develop an Islamic 'repo' transaction using sukuk for liquidity management purposes.

Other News

• More central banks in Africa may join the Islamic Financial Services Board (IFSB), the Malaysian-based standards-setting body.
  
• Assets in Islamic banks grew by 13.3% in 2009 compared with 7% growth in conventional banks within Pakistan. This growth rate is encouraging, but with conventional finance representing a much larger proportion of total assets, I would have expected Islamic finance to see growth rates be more significantly different, even given the general economic difficulties in the past year.
  
• An article proposes using the 'space value of money', which I do not completely understand.
  
• The short-term Sukuk al-Ijara issue from the Central Bank of Bahrain was oversubscribed by 330% (BD33 million for BD10 million in securities issued).
  
• Gulf Finance House says it is returning to a "back to basics strategy".
  
• Islamic banking continues to struggle to enter the Indian market.
  
• Despite all of the negative events including Nakheel, Bernama highlights some of the positives for Islamic capital market from 2009.
  
• Indonesia will offer sukuk on March 30 in an auction. There have been a few failed auctions recently with investors asking for too high yields for the government to accept.