A tale of two halves: that’s how many in the Islamic finance community would describe the events that unfolded in 2020. With the Islamic financial world seemingly coming to a standstill in March 2020 due to the Covid-19 pandemic, issuers and investors alike had to be resilient in the face of uncertainty.
Sovereigns and companies had to reevaluate their fundraising strategy to ensure liquidity with many frequent Islamic finance issuers opting to raise funding in the conventional format. Islamic asset managers, similar to their conventional peers, held more cash in preparation for possible redemptions from jittery investors.
Yet, despite the challenges of the past year, Islamic finance development continued to forge ahead with several issuers such as the Kingdom Bahrain and the Dubai Islamic Bank returning to the sukuk market in mid-Q2 2020. Moreover, government stimulus measures helped ensure that populations had ample liquidity on hand, indirectly contributing to a growth in assets under management (AUM) of many institutional investors in the Islamic finance world.
As part of our continuing coverage of global Islamic finance development, the board of editors of The Asset is pleased to highlight the key institutions that stood out against a difficult market backdrop and were able to attain their financial goals in 2020.
Issuers of the Year
An established issuer in the capital markets, the Republic of Indonesia is again recognized as the Issuer of the Year – Sovereign for being able secure solid demand for its US$2.5 billion wakala sukuk that included both a US$750 million five-year green sukuk tranche and a 30-year sukuk tranche, the first-ever by any sovereign.
The Asset names Malaysian-based Cagamas as the Issuer of the Year – Quasi-Sovereign for continuing to play a key role in enhancing liquidity in the local sukuk market and acting as a benchmark for the local Malaysian sukuk market. In 2020, Cagamas took its first significant step in embracing sustainable finance, issuing its debut Asean Sustainability SRI sukuk which was well received by the market.
The Islamic Development Bank (IsDB) wins the Issuer of the Year – Supranational award. As one of the key issuers in the Islamic finance world, the organization again proved a trailblazer in 2020, executing a US$1.5 billion wakala sukuk, a Covid-19 response sukuk with proceeds earmarked to be used exclusively in addressing the economic and social challenges caused by the ongoing pandemic.
Etihad Airways clinches the Issuer of the Year – Corporate award for helping craft the first transition sukuk in the world aimed at reducing carbon emissions from flights while Qatar Islamic Bank is named the Issuer of the Year – Financial Institution for opening a new fundraising channel despite the ongoing pandemic by tapping the Formosa market.
Covid-19 has sharpened the focus on ESG products and solutions for Islamic finance. HSBC Amanah again notches up the ESG Islamic Bank of the Year award due to its stellar efforts in pivoting the business to embrace sustainable practices and passing those practices on to the bank’s clients. Over the review period, the bank has executed sustainability-focused financings for several clients and is looking to grow its sustainable supply chain finance coverage.
Standard Chartered is another big winner in this year’s Islamic Finance awards with the international bank’s sukuk unit able to take several awards including the much-coveted Sukuk Adviser of the Year – Global award. Over the course of 2020, Standard Chartered was a key partner for a number of issuers in Asia-Pacific and the Middle East, working with sovereigns and financial institutions in accomplishing their Islamic fund-raising objectives.
Maybank Investment Bank was also active in 2020, capitalizing on its strong position in its home market of Malaysia. The bank has not only taken part in ESG-related sukuk transactions but also has been able to take debut issuers out to the market despite the volatile conditions.
Shariah-compliant
The uncertain economic situation last year saw many small and medium-scale enterprises (SMEs) rely heavily on their banking partners’ support and guidance. In Malaysia, AmBank Islamic stood out against the competition by proactively working with SMEs to not only scale up their respective businesses but also give them critical shariah-compliant financing lifelines to ensure their businesses continue to operate. AmBank Islamic is bestowed the Best SME Bank award.
While 2020 may have got off to a rough start, the Islamic finance market has continued to develop and has remained resilient with issuers and investors continuing to have faith in the industry.
According to analysis from Fitch Ratings, global sukuk supply is expected to ramp up in 2021 as issuers seek to refinance maturing debt and fund large budgetary needs. The rating agency revealed that it rated US$118.6 billion worth of sukuks in 2020 with notable growth in green and sustainable sukuk reaching US$8.4 billion last year.
Going forward, more exciting developments are expected in the Islamic finance market such as the possibility of a sukuk market in Afghanistan and further Islamic instruments in the opportunity-rich markets of Indonesia, Morocco and Turkey.
For the complete list of winners, please click here.
To learn more about these awards, please click here.
For more information about receiving the awards, please contact [email protected]
The virtual awards ceremony for The Asset Triple A Islamic Finance Awards 2021 is scheduled to take place on September 15, 2021.
