Kuveyt Turk's sukuk, other news

Kuveyt Turk Participation Bank's recent wakala sukuk was backed by a combination of murabaha receivables and ijara contracts. This is generally tradable so long as 33% of the contracts are ijara contracts. Most of the issuance of this type of sukuk (e.g. by Cagamas and the Islamic Development Bank) adopt a higher 50% level for ijara sukuk. It appears that sukuk backed by murabaha and ijara contracts is becoming more popular among financial institutions since the structure used for mudaraba and musharaka sukuk prior to a 2008 AAOIFI ruling were ruled impermissible.

Other News

• France passed a tax neutrality law for Islamic financial products recently that could encourage more Islamic finance in the country. An earlier law on Islamic financial products was struck down by the high court largely on procedural grounds.
  
• Zawya reviews sukuk activity during August. Much of the activity occurring in August and expected in September is from Malaysia.
  
• Kuwait Finance House, which has a Malaysian unit, is planning further expansion across Asia, including China and is reportedly in talks with Japanese financial institutions regarding a strategic partnership.
  
• An article describes the potential for growth in Islamic finance but notes--correctly in my opinion--that while Islamic financial institutions were less exposed to the financial crisis in general, they have not reacted as quickly as conventional institutions and have been slower to fully recover (particularly in the GCC).
  
• Sukuk returns trailed emerging market bonds in August for the fourth straight month because of continued restructuring talks around some GCC-based sukuk.
  
• Bloomberg describes briefly the Dubai-based institution, Millenium Private Equity, which subscribed for the entire sukuk from UK-based company IIT.
  
• The International Islamic Ratings Agency and Dinar Standard released a report, called "Pulse of OIC Islamic Capital Markets".
  
• Indonesia's government is planning to issue another 2 trllion rupiah ($222 million) in sukuk to the government's haj fund by private placement. Selling the sukuk to the haj fund may be a response to the several failed auctions previously. The previous auctions saw enough demand, but higher yields than conventional bond sales of comparable maturity because sukuk are less liquid than conventional bonds.
  
• Islamic finance in Indonesia has been growing, albeit from a small base of around 2.8% of total banking assets, compared with nearly 20% in Malaysia.