UAE-based lifestyle conglomerate Majid Al Futtaim broke new ground earlier this year when the company placed the world’s first benchmark-sized corporate green sukuk. Bonds & Loans spoke with John Arentz, Head of Treasury at Majid Al Futtaim, about the company’s green capital markets debut, the strategy underpinning the transaction, and why – green bond or not – treasurers need to bolster their ESG credentials in the face of a fast-changing investment landscape.
Malaysia has been pioneering the sustainable Islamic finance market well before the country’s 2014 launch of the Sustainable and Responsible investment (SRI) Sukuk framework. Zainal Izlan Zainal Abidin, Deputy Chief Executive of Malaysia’s Securities Commission, says the country needs to build on the seven SRI sukuk issued to date and pull more borrowers from the private sector into the sustainable finance market while ensuring demand from investors.
First Abu Dhabi Bank marked MENA’s debut public sukuk issuance in 2019 with its USD1bn senior sukuk. Riding on a wave of investor demand, the bank tapped the market twice, securing the largest single public issuance from a conventional bank sukuk in the region.
The South East Asian sovereign returned to market with its second green sukuk issuance in 12 months. The dual tranche conventional/green sukuk issue saw USD7bn worth of orders from high quality accounts and tightened 30bp and 45bp inside the initial guidance.
Since Saudi Arabia’s debut sovereign sukuk issuance in 2017, the size of global sukuk markets has exploded. But primary market activity has been dominated by sovereign issuance, with corporates continuing to make up only a small share of the pipeline. Whether this trend will continue remains unclear, and raises serious questions about the long-term potential of the asset class.
The global green bond market has over the past five years grown from virtually nothing into a broad sustainability-linked fixed income asset class, paying financial dividends while tackling some of the world’s most pressing climate and sustainability-related challenges. As Middle Eastern governments redouble their efforts to diversify their energy sectors and wider economies, will 2019 be the year ESG more broadly – and green bonds specifically – take the Middle East by storm?
Dato' Lee Kok Kwan, Chairman of BIX Malaysia, the Bond and Sukuk Information Exchange Malaysia, spoke with Bonds & Loans about the sukuk pipeline for the coming year, growing demand for Sharia-compliant instruments, and Malaysia’s innovative approach to Islamic finance.
As investors around the world brace for continued uncertainty in 2019 that will test the steeliest of nerves, the outlook for debt markets in the Gulf Co-operation Council (GCC) region is a much brighter one, with the potential for strong risk adjusted returns.
Leading UAE-based regional district cooling firm National Central Cooling Company PJSC – better known as Tabreed – launched its debut benchmark 7-year sukuk against the backdrop of an active deal pipeline and adverse market conditions, securing competitive pricing and an oversubscription rate of 1.5X. The funding team’s decision to prioritise speed-to-market, flexibility, and investor visibility by working with a leading global exchange like London Stock Exchange were central to the transaction’s resounding success.
Despite its reputation as a heavy emitter of greenhouse gasses, Indonesia’s green sukuk was hailed as a game changer for both Islamic and ESG investing. Luky Alfirman, Director General of Budget Financing and Risk Management, Ministry of Finance in Indonesia believes its inaugural transaction in February is the first of many to come as the government looks to double down on its commitment to climate change mitigation.
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