As usual, this was a busy week for Islamic finance around the world. Highlights (discussed below) include the growth of Shari’ah compliant mortgage backed securities, new Islamic finance options in India, and Malaysia’s cross border adventures. Read on...
UAE Mortgage Securitization
Tamweel PJSC recently announced a landmark $220 million Shari’ah compliant securitization of its mortgage assets. This represents a first for the UAE mortgage market and opens the door for the increased use of securitizations to recycle capital thereby contributing to the growth of the real estate markets in the UAE. Tamweel has targeted an international investor base by achieving high ratings of Aa2 by Moody's Investors Service and AA by Fitch Ratings Limited. I’m curious to understand the nuances of the issuance but there is no doubt that this is potentially the dawn of a new era in the Shari’ah compliant capital markets transactions. Recent reports also state that Amlak and other mortgage houses will be entering the market with mortgage backed securities.
New Islamic Finance services in India
In our latest issue DinarStandard.com reported on the prospects for Islamic finance in India. It’s gratifying to see that in just one week two major developments in the market have come to the surface. Finance group 2i Capital Group in a consortium with Oman-based Amwal Investment SAOC has launched a $300-million offshore Shari’ah-compliant Indian Infrastructure Development Fund. Separately, Srei Infrastructure Finance of Kolkata is said to have contacted HSBC for a IRS 2 billion Shari’ah compliant facility to fund their latest venture in the infrastructure equipment finance business.
Malaysia's Cross Border Adventures
Malaysia has embarked on an all out blitz to expand its Islamic finance reach. The prospects for a combined effort to promote Islamic finance and the Halal industry were given a boost at the recently held Malaysia-Indonesia Investment and Finance Summit organized by the Labuan Offshore Financial Services Authority (LOFSA). Malaysian Minister in the Prime Minister's Department Datuk Seri Effendi Norwawi and Bank Negara Malaysia governor Tan Sri Dr. Zeti Akhtar Aziz were both present along with Indonesian Minister for Economic Coordination Dr Boediono. The meeting highlighted the synergistic nature of both industries and pointed to the size and growth of each. The officials also discussed the need for Southeast Asian markets to integrate highlighting the idea that “improved financial integration will help provide the scale and increased efficiency for the financial intermediation process.” To this end the ministers discussed the need for harmonization of Islamic finance standards to facilitate the development of common approach and integrated market.
Malaysia also made overtures to increased collaboration with the United Kingdom when CIMB Group signed a Commodity Murabahah agreement and a Foreign Exchange (FX) - Forward Agreement with the London-based European Islamic Investment Bank (EIIB). This represents CIMB’s aggressive drive to expand into international markets. To top it all off Malaysia was urged to expand Islamic Banking in Bosnia by Amer Bukvic of Bosna Bank International at the recently held Malaysia-Bosnia and Herzegovina Business Forum in Sarajevo.
Other News
In other Islamic finance news Reuters reported that GE, citing rapid growth in the Middle East, has indicated a possible expansion of its car leasing business in the region through Islamic financial service offerings. Islamic finance training sees a new entry after the UAE Ministry of Higher Education and Scientific Research approved the Associate of Science Degree in Islamic Banking Program to be offered by Al Khawarizmi International College [KIC] beginning Sept 2007.
I would like to see a continuation of the topic
Posted by: Maximus | December 20, 2007 at 02:05 AM