M’sia is the largest 2010 sukuk issuer in the world

by Siti Radziah Hamzah
Malaysia remains the largest issuer of sukuk accounting for 64.6% of the total global issued outstanding as at end-June 2010. In line with the International Islamic Finance Centre (MIFC) initiative to develop Malaysia into a multi-currency global fund raising platform for Islamic finance, a number of foreign currency sukuk were issued, including those by the government, Nomura Holdings Inc and Khazanah Nasional Bhd, during the first eight months of 2010.

During the first seven months of 2010, 15 new sukuk were listed on Bursa Malaysia amount ing to RM70.5 billion, said the Ministry of Finance in the Economic Report for 2010/2011 released last week. In June 2010, the government issued the world's largest US dollar benchmark sovereign sukuk amounting to US$1.25 billion (RM3.86 billion) with a yield of 3.928% and was oversubscribed six times.

In July 2010, Nomura Holdings Inc's issue of US$100 million was the first sukuk listing by a Japanese international entity. Khazanah had in August 2010 raised a 5-year and a 10-year sukuk of S$1.5 billion (RM3.57 billion) which was oversubscribed by 4.3 times.

The sukuk was also the first Singapore dollardenominated issuance. In efforts to enhance diversity and depth of the MIFC initiative, the Deutsche Bank AG was licensed as an International Islamic Bank (IIB) in March 2010. In addition, the report said there was good response to the liberalisat ion measure, which all ows 100% foreign ownership in Islamic fund management companies. During the first-half of the year, three new key players were licensed as Islamic fund management companie s ( IFMCs) — Franklin Templeton GSC Asset Management Sdn Bhd, Saturna Sdn Bhd and OSK-UOB Islamic Fund Management Bhd — bringing the total IFMCs to 14 as at end-June 2010.

Assets of the takaful industry expanded 19.6% to RM13.9 billion, accounting for 9.1% of total insurance industry assets as at end-July 2010, from RM12.4 billion recorded at the end of 2009. The increase was attributed to the increase in family funds, which comprised 84.6% of total takaful assets.

Net contributions for family and general takaful recorded growth of 23.8% to RM2.2 billion compared to RM1.7 billion between January and July 2009. The Islamic banking system, including the development finance institutions, continued to expand in terms of market share of assets, deposits and financing in the first seven month of 2010, the report added.

(This story appeared in The Malaysian Reserve on 18 September 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)