CIMB Islamic targets more overseas sukuk

The Edge Daily: Buoyed by its success in arranging Singapore’s first Islamic corporate debt issues, CIMB Islamic says it is keenly pursuing corporate sukuk opportunities in the republic and the region, particularly Indonesia and Hong Kong.

"Our focus in terms of developing our business outside Malaysia in relation to corporate sukuk is on markets like Indonesia, Singapore and Hong Kong," said CIMB Islamic Bank Bhd executive director and chief executive Badlisyah Abdul Ghani.

"We’re working concurrently in all these markets. In light of recent issues by our clients in Indonesia and Singapore, we will probably see a few more deals in the near future," he told The Edge Financial Daily yesterday via telephone.

He said the Islamic bank was exploring opportunities with several of its clients in Southeast Asia and "other parts of the world that are issuing sukuks". "However, the ability of a market to carry out corporate sukuk issuances also depends on the readiness of the market and the readiness of the corporates," he added.

Badlisyah said it was challenging to do corporate sukuk deals in markets other than Singapore, Hong Kong and Indonesia currently due to the subprime market influence. Additionally, some markets were also not ready infrastructure-wise, he said.

When asked which of the three markets he perceived was most ready for corporate sukuk issuances, Badlisyah cited Indonesia as it already had some 20 corporate sukuk issuances to its name. "They (Indonesia) are fairly established, once they have their legal and regulatory issues perfected, their market will grow exponentially."

He commended Singapore and Hong Kong regulators for being proactive in this area. "Despite not having a complete regulatory framework for sukuk transactions, they are committed to sukuk issuances on a case-by-case basis."

According to Badlisyah, while CIMB Islamic has a corporate mandate to be involved in sukuk deals in the Gulf Cooperation Council (GCC) region, the bank has yet to venture there due to market conditions including effects of the global credit crunch.

Yesterday, CIMB Group announced that Singapore-listed property firm City Developments Limited (CDL) had appointed its wholly owned CIMB-GK Securities Ltd the lead arranger for its proposed S$1 billion (RM2.4 billion) unsecured Islamic multi-currency medium-term notes (Islamic MTN) programme.

CDL had also appointed CIMB-GK dealer and lead manager of the first issuance of sukuk (trust certificates) under the programme, based on the ijarah principle. The Islamic MTN programme and the sukuk ijarah are pioneer Islamic corporate issues in Singapore, CIMB said in a statement yesterday.

The deals are not the first for CIMB outside Malaysia. Badlisyah said that the bank had managed corporate sukuk deals in Indonesia, two of which were the 150 billion rupiah (RM54.6 million) sukuk ijarah issue for transportation firm Arpeni Pratama Ocean Line and a corporate sukuk issue for PT Bank Mualamat Indonesia.