Deals that defined the Triple A Islamic Finance Awards 2019
Triple A Islamic Finance Awards 2019
Islamic finance continues to establish itself as an effective funding avenue in the mainstream global financial system, regularly offering a significant and viable pool of liquidity for issuers and borrowers to meet their financing requirements. While Malaysia and the Gulf Cooperation Council (GCC) countries have driven the growth of Islamic finance, other countries are following suit as they adopt more comprehensive regulations to enhance their Islamic financial services such as the issuances of Islamic banking licenses.
“The acceptance of Islamic finance is gathering pace, with regulatory support in the issuance of Islamic securities like sukuk, for instance,” says one banker.
Associated with this recent growth in Islamic finance is the launching of new asset classes and innovative structures that enable the issuers and borrowers to access the market. This was evident to the board of editors at The Asset as they reviewed and evaluated the different deals and products submitted for The Asset Triple A Islamic Finance Awards 2019.
Among the deals that stood out and defined the Islamic finance markets in the past 12 months was the 500-million-ringgit (US$120 million) sukuk for HSBC Amanah, which represented the world’s first United Nations’ Sustainable Development Goals (SDG) sukuk.
Selected as the Islamic Deal of the Year, the landmark offering was the first ever benchmark sukuk issuance globally by a financial institution whose proceeds will be used to support eligible businesses and projects that are aligned with the UN SDGs.
Last year likewise saw the issuance of the first-ever sovereign green sukuk by the Republic of Indonesia (RoI) amounting to US$1.25 billion. The five-year deal showcased the country’s transition programme to reduce its reliance on hydrocarbon energy sources.
Also gaining recognition out of Malaysia was the 222.30-million-ringgit green sukuk issued by Universiti Teknologi MARA through UiTM Solar Power. Voted as the Best SRI Sukuk, this was the first green financing undertaken by a public institute of higher education in Malaysia.
Another pioneering transaction was the 250-million-pound (US$317 million) Islamic residential mortgage-backed securities (RMBS) priced by Al Rayan Bank in the UK, which was chosen as the Best Structured Finance Sukuk for EMEA.
Malaysia’s national mortgage corporation Cagamas demonstrated the strength of its credit when it tapped the sukuk market amid the pervading uncertainty following the country’s general election on May 9, 2018 that toppled the ruling coalition.
The company printed a 1.5-billion-ringgit sukuk on May 17, becoming the first AAA-rated corporate issuer to arrange a sukuk through public offering after the general election. The deal, voted as the Best Local Currency Sukuk, generated a strong investor demand, enabling Cagamas to upsize the issuance by an additional 500 million ringgit.
Another trend that characterizes the Islamic finance market is the increasing focus on digitalization as Islamic banks attempt to keep pace with their conventional counterparts in meeting clients’ needs.