Ifg weekly briefing (2)

WEEKLY BRIEFING
Issue 47 | Sunday, August 25, 2013
FEATURE
A third Islamic bank, another step forward for Tunisia
By Blake Goud / IFG
PORTLAND | Sat, Aug 24
`
INSIDE THIS ISSUE
Smart tech and citizen vigilance to root out fake halal labels ....... 3
A third Islamic bank, another step forward for Tunisia ................. 4
Meezan plans Pakistan‘s first airtime sukuk in Q4 ....................... 6
EXCLUSIVE-SocGen plans $300 mln sukuk programme in
Malaysia-sources......................................................................... 7
Oman Development Bank considers Islamic window................... 9
STOCKS NEWS MIDEAST-Individual speculators to dominate
Gulf ........................................................................................... 10
FOREX-Dollar slides after disappointing U.S. housing data ...... 11
Dutch lender Rabobank tots up likely costs of Libor scandal ..... 12
Source: Thomson Reuters EIKON - Indices Guide <Indices>
The Arab Spring has had a potentially lasting impact through the
development of Islamic finance in North Africa. In Egypt, the sukuk
law passed under the Morsi government is set to be implemented,
even if the timeline is unclear. In Tunisia Islamic banking market
development seems to have more support as detailed in a Thomson
Reuters Zawya report. Since that report was released (in June), the
market acceptance for Islamic banking was further demonstrated
with the recent application and proposed capital increase of El
Wifack Leasing to become the country‘s third fully Islamic bank.
The application of El Wifack to undergo a conversion to an Islamic
bank demonstrates a different strategy for Islamic finance in Tunisia
compared with neighboring Libya and Oman, which opened to
Islamic banks this year.
In Libya, there is significant interest from Gulf-based Islamic banks
who are considering entering the market through acquisition.
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IIBR Vs. LIBOR, (USD 6 month)
6 Month USD IIBR 6 Month USD LIBOR
In Oman, the development is through new standalone Islamic
banks as well as Islamic windows of conventional banks, a
strategy that is further supported with the decision by the Oman
Development Bank to open an Islamic window rather than
convert fully into an Islamic bank.
- Continued on Page 4-
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Global Sukuk and Bond Indices
DJ Sukuk Index
Thomson Reuters Global Sukuk Index

ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING 2
 UPDATE 3-Arabtec eyes merger to create Gulf's biggest
builder-RTRS
 Is Indonesia trying to plug the currency hole with debt? -
RTRS
 India central bank allows non-bank Islamic finance firm -
RTRS
 Analysis - Egypt's rulers can count on Gulf aid despite
bloodshed - RTRS
 MANDATE: Malaysia Airports hires 4 for MYR500m sukuk -
IFR
 UPDATE: Expectations rise on Turkey sukuk* - RTRS
 Islamic Development Bank, Saudi Fund provides finances
amounting to $ 21.7 billion for 90 projects-WAM-Zawya
 Analysis: Sovereign funds' fortunes turn as emerging assets
sour - RTRS
 Turkish lira hits record low on capital outflow fears - RTRS
 Bank Muamalat Malaysia Courts Merger, Bank Rakyat And
MIDF Among Possible Candidates On Its List Malaysian
Digest
 Islamic countries to inject fresh capital into Bosnian bank -
Dalje
 Research forecasts mixed outlook for GCC markets – Gulf
News - Zawya
 Analysis: With Gulf aid, Egypt economy can limp through
crisis - RTRS
 WRAPUP 1-Emerging markets' selloff deepens on fear of
Fed fallout - RTRS
 Bahrain's Arcapita sells 3PD Holding to XPO Logistics -
RTRS
 Qatar government spending growth slows sharply in
2012/13 - RTRS
 Update-Moody's: Oman's robust growth outlook and sound
fiscal metrics support creditworthiness – RTRS*
 Abu Dhabi's Mubadala unit to develop oil field in Thailand -
RTRS
 Meethaq Shari'a Board reviews new Islamic products -
Zawya
 GCC insurance industry on growth path - Gulf News
 UAE banks lending at their fastest rate in two years – The
National
 UAE investors: ‗Compensate us for cancelled projects‘ - Gulf
News
 Changes ahead for the Dubai property market – Hadef &
Partners - Zawya
WATCH LIST
 RPT-Fitch Rates Indonesia's Proposed PPSI-III Sukuk 'BBB-
(EXP)'-RTRS
RPT-Malaysia Maybank's Q2 net profit rises 9 pct-RTRS
 Alizz Islamic Bank geared up to unveil financial products –
Times of Oman
 MOVES-Dubai's Arabtec hires former Aldar chief executive -
RTRS
*This service is only available to EIKON users, click here to
register
Arabtec logos are seen on buildings under construction in the Marina area of Dubai in
this picture taken November 28, 2009. CEO says considering merger with Saudi,
Kuwait contractors. Merger would create region's largest construction company.
Arabtec shares rise 3.9 pct in Dubai REUTERS/Steve Crisp
NEWS WRAP UP
CALENDAR OF EVENTS
MONDAY, AUGUST 26 - 27
MALAYSIA - IFSB-INCEIF Executive Forum
MONDAY, AUGUST 26 - 29
MALAYSIA - Islamic Markets Programme: Widening Market
Connectivity in Islamic Finance
TUESDAY, AUGUST 27
MALAYSIA - Malaysia In–House Legal Summit 2013
TUESDAY, AUGUST 27
PAKISTAN - IFN Roadshow 2013 Pakistan
THURSDAY, AUGUST 29
SRI LANKA - IFN Roadshow 2013 Sri Lanka
 Affin confident of 15% return – Malaysian Reserve
 CORRECTED-UPDATE 1-RLPC-Bahrain Investcorp sells Skrill
to CVC Capital for 600 mln euros
 Text-MARC withdraws its rating on Putrajaya Holdings Sdn Bhd
– RTRS*
 UPDATE 1-Saudi Electricity to replace CEO with Aramco
executive - RTRS - Zawya
 RPT-Indonesia posts wider current a/c deficit in Q2, 4.4 pct of
GDP - RTRS

Contact details
IFG Briefing Analyst Team
Ameena Al Haddad
Ammar Radhi
Karim Arafa
Redha Al Ansari
Shaima Hasan
Yusuf Radhi
Emmy Abdul Alim (Editor)
Community Specialist Team
Blake Goud (Community
Leader)
Duaa Al Masqati
Noor Khamdan
Telephone
+973 1750 2020
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For most consumers seeking halal products, they have to trust the retailer to sell only food with bona
fide halal certificates to guarantee their halal-ness. But not all retailers do that; in Indonesia, data
released by the Food and Drug Monitoring Agency in 2011 showed that only a third of the halal
products in the overwhelmingly Muslim-dominant country were backed by official halal certificates.
The situation is not dissimilar in Malaysia, where the Consumer Protection and Welfare Board recently
asked the country‘s Islamic Development Department (JAKIM) to increase monitoring of the products
being sold as halal in supermarkets. The Consumer Protection Board found that certain foods with
the halal label were not actually approved by JAKIM. The suggestion for greater monitoring by a
government body is a seemingly common sense response to failures of a government-sponsored
certification program, but with finite resources, it is not always possible to accomplish and sustain.
One of the important developments of the past few years is the rapid proliferation of smart phones that
has led to ‗crowdsourcing‘ where a vast number of consumers replaces or supplements a specialist
organization that used to be responsible on its own. Think of the impact of citizen journalists working
on Twitter to deliver news faster and with more details than from the newspapers and TV stations that
previously dominated.
It doesn‘t mean that newspapers—or in the case of halal monitoring, regulatory organizations—are
destined to be replaced by the ‗crowd‘, but it does mean they should adapt and more aggressively use
the tools at their disposal to accomplish their mission. For an organization like JAKIM, it should recruit
Muslim consumers who value being able to trust that products on the shelf at their supermarkets
labeled as halal are certified as such.
During the manufacturing process, the products and their supply chain and logistics that get them
from the suppliers to the distributors to the consumers will not allow for contamination and this
information is collected by the certification organization. In some cases, it is organized together in a
form that can be read through a matrix barcode such as the Quick Response (QR) code on the
packaging by anyone with a smart phone, like a solution that was developed by the Halal Science
Center at Chulalongkorn University in Thailand (pdf). Similar mobile technology for verifying the
certification of halal products is used by a Swedish company and is under development by JAKIM
itself (the MyHalalTrace system).
Certification and monitoring by supervisory bodies is important, but it should be supplemented
wherever possible to expand its reach by using consumers and the technology whose reach is
spreading to identify the most significant areas for organizations like JAKIM to focus their limited
resources to ensure that only halal certified products can be sold as being halal.
(Issues such as this one will be tackled at the Global Islamic Economy Summit, organized by
Thomson Reuters and the Dubai Chamber of Commerce, to be held in Dubai November 25-26, 2013.
For more information on the summit and to connect on social media, please visit the Summit website:
http://www.globalislamiceconomy.com/)
COMMUNITY
Smart tech and citizen vigilance to root out fake halal labels
By Blake Goud / IFG
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FEATURE
A third Islamic bank, another step forward for Tunisia
By Blake Goud / IFG
- Continued from Page 1 –
State of Islamic banking in Tunisia
In Tunisia, the longest standing Islamic bank is Al Baraka Bank,
which holds an offshore banking license while Zitouna Bank is
currently the only domestic Islamic bank, having been founded in
October 2009 and currently owned by the central bank with the
Islamic Development Bank (IDB) recently acquiring a 25% stake. In
addition, UAE‘s Noor Islamic Bank opened a representative office in
the country in 2008 but has not expanded further. The most recent
development by El Wifack provides forward looking information about
the potential of the market relative to the conventional market, which
contrasts with the historical trend.
Al Baraka Tunisia‘s financial statements between 2005 and 2011 (the
most recently available), shows annualized growth in total assets of
16%. The growth in receivables from Islamic finance was 15%
annually while on the liability side, deposits grew at a slightly quicker
17%. The financing mix was similar to other Islamic banks—
dominated by murabaha, ijara and tawarruq. When the assets of
Zitouna Bank are added, the two banks represent 2.5% of the total
banking sector.
During the pre-financial crisis period, despite limitations as a result of
its offshore banking license, Al Baraka kept pace with the rest of the
banking sector with market share holding at 1% to 2% of the banking
system. With the post-revolution transition where the government is
now more supportive of Islamic banking, there is potential for further
growth and it is likely to be driven in large part by the new entrants
who will likely see their growth driven first by their ability to attract
deposits. The survey conducted by Thomson Reuters Zawya found
that a large proportion of consumers are unhappy with their current
financial institution and nearly half of those not currently using an
Islamic bank would consider switching.
Development of sukuk market and liquidity management
There are two areas where the government, which recently passed a
law permitting sukuk, can provide the most assistance: sukuk, and
liquidity management. They are likely to get assistance on both from
international organizations. On the sukuk front, the growth in Islamic
banks is likely to be driven first by a shift into deposits as the
economy remains constrained by political instability and a slow
recovery in Europe, which accounts for the country‘s largest export
market. The sukuk would allow the government to raise funds, but
also provide a safe asset for the Islamic banks to invest deposits in
excess of that used to provide customer financing.
The Tunisian prime minister‘s office has said that the IDB‘s Islamic
Corporation for the Insurance of Investment and Export Credit
(ICIEC) will provide up to $600 million in insurance for a sukuk
offering through its sukuk insurance program. This should provide
encouragement for the government but may also lead to greater
international investor demand at the expense of domestic Islamic
banks (for whom the insurance would be not as valuable because
should the government default they will have greater problems than
losses on sovereign sukuk). When the government is considering its
sukuk, it should consider an ICIEC guaranteed hard currency issue
for international investors and a local currency sukuk targeted at
domestic Islamic banks.
The other area is liquidity management, which will be less of a
problem with one additional Islamic bank provided El Wifack‘s
application is accepted. It will also be less of a challenge than in
Oman where tawarruq is prohibited, which deprives Islamic banks
the opportunity to participate in money market transactions with
conventional banks. The International Islamic Liquidity Management
Corporation‘s (IILM) sukuk programme would be of assistance to
Tunisia‘s Islamic banks, but a local currency money market will still
be required and Islamic banks in Tunisia are likely to have to
compete for allocations.
An alternative would be to follow a possibility covered in Nigeria‘s
Islamic banking laws that would use IILM sukuk as collateral for
domestic sukuk. This could be done with a local currency sukuk-
backed sukuk that uses IILM sukuk as collateral which would be
issued by the central bank who could either retain the currency risk
(which would see their local currency sukuk liabilities decline in value
relative to the USD-denominated collateral) or could hedge away
using sharia-compliant currency hedging.
With the potential growth in Islamic banking in Tunisia—the Thomson
Reuters Zawya report suggests potential growth to reach 25-40% of
total banking assets in the next 5 years—the government should
provide assistance to facilitate the strengthening of the industry today
to be in a position to benefit when the political risk declines and the
export markets in Europe see further economic growth following the
continent‘s recent exit from recession driven by France and Germany
who together account for 40% of Tunisia‘s exports.
Zitouna Bank AlBaraka Bank
Number of Branches 32 8
Commenced Operations 28-May-10 1983
Capital $50 million 70 million TND ($45 million)
Ownership
Zitouna Bank was placed under the supervision and control
of the Central Bank of Tunisia (BCT)
87% owned by the government, the rest owned by
private companies
2011 Results
Total Assets, Thousand USD 325,946 592,331
Total Liabilities, Thousand USD 289,564 497,874
Operating Income, Thousand
USD
15,497 27,125
Net Income (Loss) (511) 8,699
Source: Tunisia 2013 Islamic Finance Country Report

SUKUK REVIEW
Sukuk Market Overview
State-owned Syarikat Prasarana Negara
Bhd has sold Islamic bonds or sukuk worth
1 billion ringgit ($303 million) to fund
extending the country's public transport
network. The sukuk consists of a 10-year
tranche with a semi-annual yield of 4.26
percent and a 15-year tranche at 4.58
percent annually. The tranches were
oversubscribed 3.27 times and 3.1 times
respectively. Prasarana said in a statement
on Thursday that bookbuilding and sale of
the sukuk were "well-executed" despite a
challenging market and working within a
short time frame. The government-
guaranteed sukuk is arranged by
AmInvestment Bank Bhd and CIMB
Investment Bank Bhd, while HSBC Amanah
Bhd and RHB Investment Bank Bhd are
lead managers and joint bookrunners.
Malaysia's outstanding sukuk stood at $41.5
billion as of July 2013, accounting for
around 68 percent of the global market. -
RTRS Thu, 22 Aug
The Republic of Indonesia
(Baa3/BB+/BBB-) will meet investors with
Citigroup, Deutsche Bank, and Standard
Chartered Bank for investor meetings in
relation with a 144 A/Reg S sukuk bonds.
Investor meetings will start on Friday in
London. The republic had priced a USD1bn
global back in June with a tenor of 10.25
years. The issue paid a coupon of 5.375%
and priced at 99.391 for a yield of 5.45% - a
full 100bp more than the 3.375% coupon it
had paid on a US$1.5bn 10-year bond as
recently as April, its lowest print of all time
on a conventional bond at that tenor. RTRS*
Wed, 21 Aug
RAM Ratings has assigned a preliminary
long-term rating of AA2, with a stable
outlook, to Bright Focus Berhad’s (―Bright
Focus‖ or ―the Group‖) proposed Islamic
Securities of up to RM1.35 billion (―proposed
Sukuk‖). Bright Focus owns 96.8% of Maju
Expressway Sdn Bhd (―MESB‖ or ―the
Company‖) - the concessionaire of the 26-
km Maju Expressway (―MEX‖ or ―the
Highway‖). As the repayment of the
proposed Sukuk relies solely on cashflow
from MESB, the preliminary rating reflects
the strong project economics and robust
financial profile of the Company, supported
by the covenants under the transaction
structure. The Highway offers a direct link
between the commercial centre of Kuala
Lumpur and Putrajaya and Cyberjaya. Since
tolling commenced in 2008, the Highway‘s
traffic volume has notched up a
compounded annual growth rate of 20%,
with average daily traffic at its 2 toll plazas
reaching 100,000 vehicles in 2012. RAM
Tue, 20 Aug
The Turkish Treasury said on Tuesday it
had issued 1.817 billion lira ($930 million)
worth of lira-denominated lease certificates,
or sukuk, to diversify borrowing instruments,
broaden the investor base and increase
domestic savings.
It met total demand from investors for the
sukuk which has a maturity of August 19,
2015, the treasury said on its web site.
RTRS* Tue, 20 Aug
Indonesia raised 1.54 trillion rupiah
($146.81 million) in sharia bonds at an
auction on Tuesday, slightly above an
indicative target of 1.5 trillion rupiah despite
market turnmoil, the finance ministry's debt
office said. Yields for 6-month sharia T-bills
and 30-year project-based sukuk were
higher than the previous auction on July 23.
The G20 economy sold 900 billion rupiah of
6-month sharia T-bills and 640 billion rupiah
of 30-year project-based sukuk. Total bids
were 11.145 trillion rupiah and the highest
bid-to-cover ratio was 11.06 for 6-month T-
bills. Foreign holdings in sukuk were 7.12
percent as of Aug. 16, down from 7.36
percent at end-June as the market suffered
from a heavy sell-off. RTRS* Tue, 20 Aug
Moody's Investors Service, has assigned a
long-term (P)Baa3 rating to the proposed
US dollar trust certificates to be issued by
Perusahaan Penerbit SBSN Indonesia III
("PPSI III"). The payment obligations
associated with these certificates are direct
obligations of the Government of Indonesia.
The outlook is stable. In Moody's opinion,
the payment obligations represented by the
securities to be issued by PPSI III are
ranked pari passu with other senior,
unsecured debt issuances of the
Government of Indonesia. As such, Moody's
(P)Baa3 rating to the proposed sukuk
issuance is in line with the Government of
Indonesia's Baa3 issuer rating and stable
outlook given that any direct government
obligation whose repayment is handled by
the Government of Indonesia receives a
rating equivalent to that of the government..
Moody‘s Wed, 21 Aug
Source: Thomson Reuters EIKON CDS <REUTERSCDS>
*This service is only available to EIKON users, click here to
register
Credit Default Swaps
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Bahrain Egypt Dubai Indonesia
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Saudi Qatar Malaysia Abu Dhabi

Pakistan's Meezan Bank plans to arrange the country's first airtime-
based sukuk (Islamic bond), a format favoured by
telecommunications operators wishing to tap liquidity in the Islamic
capital markets.
The local-currency issuance would have a tenor of between five and
10 years and an approximate size of 7 billion rupees ($68.5 million),
said Suleman Muhammad Ali, vice president of product
development and sharia compliance at Meezan. The sukuk would
be issued in the fourth quarter of this year.
Ali did not name the issuer. Sukuk that use intangible assets such
as minutes of mobile telephone use have been tested elsewhere,
allowing firms with limited physical assets to raise cash via Islamic
finance, which follows religious principles such as bans on interest
and gambling.
"The structure is based on ijara and sub-ijara of services. Assets are
airtime (minutes) represented by prepaid calling cards and identified
by the serial number of each card," Ali said.
In an Islamic ijara deal, one party leases an asset to a client for an
agreed price; unlike a conventional lease, the structure does not
allow a lessor to charge interest on defaulted or delayed payments.
PIPELINE ISSUE
Meezan plans Pakistan's first airtime sukuk in Q4
By Bernardo Vizcaino / REUTERS
DUBAI | Wed, Aug 21
INTERNATIONAL SUKUK WEEK TOP GAINERS*
INTERNATIONAL SUKUK WEEK TOP LOSERS*
NAME CURRENCY BID ASK
MATURITY
DATE
YIELD TO
MATURITY
LAST WEEK
YIELD
YTM
WOW%
CBB INTL SUKUK USD 103.94 104.31 6/17/2014 1.53 1.648 -21
RAK CAPITAL USD 105.75 106.75 7/22/2014 1.81 1.67 -8
ADIB SUKUK USD 104.10 104.49 11/4/2015 1.96 1.913 -5
ISLAMIC DEV BANK USD 102.95 103.02 5/25/2016 1.25 1.314 -5
ADCB CAYMAN USD 105.62 106.12 11/22/2016 2.26 2.368 -5
NAME CURRENCY BID ASK
MATURITY
DATE
YIELD TO
MATURITY
LAST WEEK
YIELD
YTM
WOW%
DUBAI DOF AED 102.25 104.25 11/3/2014 2.47 1.354 82
IDB TRUST SERVIC USD 102.17 103.19 9/16/2014 0.78 0.819 33
INDONESIA SY USD 104.00 104.50 4/23/2014 2.76 2.019 27
ISLAMIC DEV BANK USD 101.62 101.63 10/27/2015 0.79 0.848 20
INDONESIA SY USD 94.50 94.88 11/21/2018 5.52 4.376 19
*The top gainers and losers price ranking is driven by the yield to maturity movement on week to week basis
Source: Thomson Reuters EIKON – Sukuk Speed Guide - International Sukuk <0#INTLSUKUK>
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The airtime sukuk was approved in November by the sharia board of
Meezan, the country's first and largest Islamic bank. The sharia
board is led by well-known scholar Muhammad Taqi Usmani.
"In terms of innovative sukuk structures, I believe that the local
industry is way ahead compared to other global markets, partly due
to the strict stance on tawarruq and commodity murabaha of the
local sharia scholars," Ali said.
Tawarruq or commodity murabaha is a common cost-plus-profit
arrangement in Islamic finance, but the practice is criticised by some
scholars as not sufficiently based on real economic activity, a key
sharia principle.
AIRTIME
In recent years, telecommunications operators across the Gulf and
southeast Asia have tested different structures for their sukuk,
helping them offset a lack of tangible or unencumbered assets for
use in their financing plans.
Malaysian mobile phone operator Axiata Group issued a two-year, 1
billion yuan ($163 million) sukuk in September last year using
airtime vouchers through a wakala structure, a common agency
agreement in Islamic finance.
Last August, its subsidiary Celcom Axiata raised 5 billion ringgit
($1.52 billion) through a murabaha, an Islamic contract that
stipulates an agreed mark-up between parties.
The public tranche of that deal raised 3 billion ringgit from an order
book of more than 10 billion ringgit, while the remaining 2 billion
ringgit was placed with strategic investors.
In 2007, Saudi Arabia's Etihad Etisalat 7020.SE (Mobily) used
airtime in a $2.85 billion sharia-compliant project financing deal,
which it refinanced in 2010 with same format.
The United Arab Emirates' Etisalat ETEL.AD set up an airtime-
based sukuk programme in November 2010 but did not tap the
market.

PIPELINE ISSUE
EXCLUSIVE-SocGen plans $300 mln sukuk programme in Malaysia-sources
By Al-Zaquan Amer Hamzah / REUTERS
KUALA LUMPUR | Sat, Aug 24
Societe Generale will launch a 1 billion ringgit ($300 million) Islamic
bond programme in Malaysia, two sources familiar with the deal told
Reuters, becoming the second major European bank to issue sukuk
and the first to do so in Asia.
SocGen, France's second-largest listed bank, is planning to issue
the first tranche of the sukuk by the year-end, said one of the
sources, who declined to be identified as he was not authorised to
speak on the matter.
Western banks looking to raise capital are increasingly drawn to the
Islamic bond market as the cost of credit is lower than in
conventional markets. The Middle East unit of HSBC Holdings
HSBA.L tapped the market in 2011 with a five-year $500 million
issuance.
The growing popularity of Islamic debt as a choice of investment
among Muslim banks and funds is also buoying the outlook for
sukuk, as Islamic bonds are known.
Issuers of sukuk do not pay interest, a practice forbidden in Islam.
Instead, buyers of sukuk become co-owners of the debt and receive
annual profits from the issuer.
Global sukuk issuance grew 54 percent to $131.2 billion last year,
with Malaysia accounting for 74 percent of primary market
issuances.
Saudi Arabia followed with a 8 percent market share, and the United
Arab Emirates with 4.7 percent and Indonesia with 4.6 percent,
according to KFH Research, an Islamic investment research firm.
Malaysia has emerged as the world's No.1 market for primary sukuk
issuances, with its strong regulatory framework, low taxes and
geographical proximity to expanding Asian wealth.
The Malaysian central bank last month implemented new laws to
stress compliance with Islamic laws, introducing higher penalties
and making sharia advisors legally liable for the first time.
Hong Leong Islamic Bank is advising the SocGen deal, according to
the source.
SocGen will soon seek approval for its issuance plans from
Malaysia's Securities Commission, having already received the
green light to become a bond issuer from the central bank, the
source said.
The central bank did not immediately respond to a request for
comment, while a Hong Kong-based spokesperson for SocGen
declined to comment.
The funds raised will go towards buying assets in Dubai, where
SocGen's Middle East private banking operations are
headquartered, said the source.
"Everything is in place," the source said.
EYE ON MALAYSIA
The issuance will help SocGen diversify its funding sources while
benefiting from attractive premiums.
In the past year, three-year AAA-rated sukuk have offered yields of
3.65 to 3.72 percent, while conventional bonds with a comparable
tenor and rating have yielded 3.69 to 3.76 percent. The lower yield
range for sukuk translates into higher savings for issuers.
SocGen's sukuk in Malaysia will carry tenors of up to 15 years,
according to the second source.
"For European countries that have yet to develop a regulatory
framework for Islamic finance, Malaysia is an attractive destination,"
said Baljeet Kaur Grewal, managing director and vice chairman of
KFH Research.
The large number of industry players in Malaysia, including foreign
institutions mandated to invest in Islamic instruments, creates a
ready market with significant demand for sukuk, said Kaur.
"There are a number of corporations planning to raise funds in the
Malaysian Islamic capital market, from Australia to the Middle East,
and this trend looks set to continue."
Other foreign companies such as the National Bank of Abu Dhabi
NBAD.AD and Singapore-based palm oil producer Golden Agri-
Resources Ltd GAGR.SI have in the past year tapped Malaysia's
sukuk market.
In the first seven months of this year, issuers in Malaysia raised 19.8
billion ringgit through 47 sukuk, according to Thomson Reuters data.
That was a decline of nearly a third from a year earlier due to
uncertainties surrounding a May election in Malaysia and a dip in
external demand.
However, demand from Malaysia's public institutional funds such as
the Employees Provident Fund and Lembaga Tabung Haji has
remained resilient.

INTERNATIONAL SUKUK LEAD ARRANGERS LEAGUE TABLE 2013
BOOK RUNNER AMOUNT ISSUED ($MILLION) MARKET SHARE NUMBER OF ISSUES
HSBC 1,987.5 16.6 7
Deutsche Bank 1,574.6 13.2 3
Standard Chartered 1,182.0 9.9 8
Emirates NBD PJSC 886.0 7.4 7
Citi 782.2 6.5 4
National Bank of Abu Dhabi 704.2 5.9 5
Dubai Islamic Bank Ltd 682.2 5.7 4
Riyadh Bank Ltd 500.0 4.2 1
Bank Al Bilad 500.0 4.2 1
Alinma Bank 500.0 4.2 1
RHB 434.4 3.6 3
RBS 291.7 2.4 2
Malayan Banking Bhd 200.0 1.7 1
Abu Dhabi Commercial Bank Ltd 165.6 1.4 1
Abu Dhabi Islamic Bank (ADIB) 165.6 1.4 1
Natl Comml Bank Saudi Arabia 125.0 1.0 1
Kuwait Finance House 125.0 1.0 1
Natixis 125.0 1.0 1
Al Hilal Islamic Bank 125.0 1.0 1
CIMB Group Sdn Bhd 125.0 1.0 1
Credit Agricole CIB 125.0 1.0 1
Barwa Bank QSC 125.0 1.0 1
Masraf Al Rayan 74.6 .6 1
QInvest LLC 74.6 .6 1
Alkhair Capital Saudi Arabia 74.6 .6 1
Goldman Sachs 74.6 .6 1
11,974.9 17
Source: Thomson Reute
Source: Thomson Reuters
SUKUK PIPELINE 2013
Issuer Name
Sukuk
Structure
Country Status
Subsc.
Date
Issue Size
($M)
Tenor Arranger/Advisor
Inverfin Sukuk Berhad Unknown Malaysia Announced - 56.471 - -
Al Madina Financial &
Investment Services
Company
Unknown Oman Announced - 129.88 - -
Riyad Bank Unknown Saudi
Arabia
Announced - - - -
Bahrain
Telecommunications
Company
Unknown Bahrain Rumoured - - - BNP Paribas
Citigroup
Ministry of Finance -
Egypt
Musharaka Egypt Announced 2014 2,000 3 Years
to 5
Years
National Bank of
Egypt
WOM Finance Ijarah Indonesia Announced 2013 28.841 - -
Inverfin Sukuk Berhad Unknown Malaysia Announced - 56.471 - -
Source: Zawya. For complete list of pipeline click here

BANKING NEWS
Oman Development Bank considers Islamic window
By Fatma Alarimi and Bernardo Vizcaino / REUTERS
MUSCAT/ Thu, Aug 22
Oman Development Bank (ODB) is considering the launch of an
Islamic window to offer sharia-compliant products to small and
medium-sized firms, an executive said.
In December, Oman became the last country in the six-member Gulf
Cooperation Council to adopt Islamic finance, issuing regulations for
the sector. Developing Islamic finance and smaller firms are two
policies which the government hopes will cut unemployment.
Government-owned ODB, founded in 1977, considered a full-
fledged conversion to become an Islamic bank but is likely instead
to opt for an Islamic window, said Hamed bin Salim Al Harthy,
assistant general manager for branches at ODB.
"The bank will not move toward becoming a full Islamic bank but we
have to keep up with the trend in the market, and the trend is for
Islamic products," he told Reuters.
Al Harthy said he did not expect the Islamic window to start
operating before the end of this year since the bank was currently
restructuring its operations.
ODB, which had a net loan portfolio of 100 million rials ($260 million)
as of August 2012, already offers interest-free loans of up to 5,000
rials but they are technically not sharia-compliant.
.
In March, the bank held a training course for its senior staff on
Islamic banking products, which follow religious principles such as a
ban on interest payments.
Although ODB is small, it could add competition to Oman's fledgling
Islamic finance sector. Central bank chief Hamood Sangour al-
Zadjali said last week that the central bank had no intention of
granting more permits for new Islamic banks or windows, but ODB is
believed to already have permission in principle for a window.
Oman has two full-fledged Islamic banks, Bank Nizwa and Al Izz
Islamic Bank, as well as several Islamic windows from conventional
lenders.
Under the rules for Islamic windows, ODB would only be able to
offer Islamic products through stand-alone branches, which would
require converting some of its existing 15 branches or opening new
ones.

EQUITIES REVIEW
MARKETS OVERVIEW
STOCKS NEWS MIDEAST-Individual speculators to
dominate Gulf
By Nadia Saleem / REUTERS
DUBAI | Sun, Aug 25
MARKET SNAPSHOT
MEA Value WoW MTD YTD
TASI 8190.89 0.42% 3.48% 20.43%
DFMGI 2734.52 4.08% 5.64% 68.53%
ADI 3957.95 2.17% 2.87% 50.44%
KWSE 8078.33 -0.69% 0.10% 36.13%
XU100 67932.32 -8.54% -7.42% -13.14%
EGX30 5467.30 2.49% 2.68% 0.09%
MSI 6915.15 1.00% 4.09% 20.04%
QSI 10077.32 1.69% 3.84% 20.56%
Global Value WoW MTD YTD
FTSE 100 6492.10 -0.12% -1.95% 10.08%
DAX 8416.99 0.30% 1.70% 10.57%
STOXX 50 1080.24 -0.99% 2.09% 7.21%
DJIA 15010.51 -0.47% -3.16% 14.55%
S&P 500 1663.50 0.46% -1.32% 16.64%
TOPIX 1082.07 -0.08% 0.88% 32.95%
HANG
SENG 67932.32 -8.54% -7.42% -13.14%
NIKKEI 13660.55 0.08% -0.06% 31.41%
Source: Thomson Reuters EIKON - Indices Guide <Indices>
Individual speculators are likely to continue dominating Gulf
markets because of thin local news flow.
Retail traders have led stocks in the United Arab Emirates and
Qatar in recent days, while Saudi Arabia and Kuwait are usually
directed by local individual investors even in normal times.
Dubai's Union Properties, which jumped 29.9 percent to 0.54
dirham last week, shows no sign of losing steam. Its break above
major chart resistance at 0.50-52 dirham, where it peaked in May
this year and March 2012, triggered a double bottom formed by
the 2011 and 2012 lows.
That pattern points up to the 0.75 dirham area in coming weeks
or months. The stock is up 37.5 percent year-to-date,
underperforming the Dubai benchmark .DFMGI, which has risen
66.4 percent.
Fellow property firm Deyaar also broke major technical
resistance last week; its rise to 0.50 dirham eclipsed the 2012
high of 0.46 dirham.
In Qatar, Qatar International Islamic Bank's jump to 59.60 riyals
on Thursday broke major technical resistance around 58.00
riyals, which had repeatedly capped the stock since early 2011.
It faces further resistance at 60.00 riyals, the January 2009 peak,
but any clean break (two daily closes) would trigger a double
bottom formed by the 2008 and 2009 lows and pointing up above
80 riyals in the long term.
In Egypt, the army-backed government shortened a night-time
curfew by two hours on Saturday, 10 days after imposing it
during a fierce crackdown on Muslim Brotherhood protesters in
Cairo.
This, as well as the protesters' failure to stage major
demonstrations on Friday, may support sentiment in the stock
market .EGX30, though many local and foreign investors think an
extended rally remains unlikely without clearer signs of an easing
of political tensions.
Global market cues are slightly positive; stock indexes around
the world edged higher on Friday while the dollar fell after a U.S.
government report on new single-family home sales raised
doubts about the timing and extent of cuts to the Federal
Reserve's stimulus program.
A rise in gasoline futures helped oil prices pull higher on Friday
following news of a unit shutdown at a Canadian East Coast
refinery. Brent crude rose to $111.04 per barrel.
90
110
130
150
170
Thomson Reuters/ IR Islamic Indices
MENA Global AsiaPac ex Japan

FOREIGN EXCHANGE REVIEW
FOREX-Dollar slides after disappointing U.S. housing
data
By Wanfeng Zhou / REUTERS
NEW YORK,| Fri, Aug 23
The dollar fell against a basket of currencies on Friday, retreating
from a three-week peak against the yen, as a steep drop in U.S. new
home sales dented expectations that the Federal Reserve will
reduce its asset-buying program next month.
The euro climbed above $1.34 after the data, edging back toward a
six-month high set on Tuesday. Signs of an improving euro zone
economy have buoyed the currency in recent weeks.
Sales of new U.S. homes slid 13.4 percent in July to their lowest in
nine months, hurt by the rise in U.S. mortgage rates, suggesting an
economy that may not be as robust as many people think.
"This report makes it look more likely that tapering will come later
rather than sooner, perhaps under the leadership of a new Fed
chair," said Douglas Borthwick, managing director of Chapdelaine
Foreign Exchange in New York.
The dollar slipped 0.2 percent against a basket of six major
currencies to 81.360.
Uncertainty about when the Fed will start reducing its $85-billion per
month bond buying program has pressured the dollar in recent
weeks. Minutes of the Fed's July meeting showed differences of
opinion among members of the Federal Open Market Committee as
to when the central bank should act.
Currency speculators pared their bets in favor of the U.S. dollar for a
fifth consecutive week in the week ended Aug. 20, data from the
Commodity Futures Trading Commission showed on Friday.
The value of the dollar's net long position fell to $13.54 billion, the
smallest in two months, from $17.62 billion the previous week.
Speculators were bullish on the euro for a third straight week.
The euro rose 0.2 percent to $1.3383, helped by comments from
European Central Bank policymaker Ewald Nowotny, who said he
did not see much reason for the ECB to cut interest rates. He spoke
after surveys showed euro zone economic activity quickening.
A second reading of German gross domestic product confirmed that
Europe's biggest economy grew by 0.7 percent in the second
quarter, helped by domestic demand, fueling optimism Europe's
largest economy will outperform in 2013.
The recent pickup has pushed euro zone money market rates
higher, and if sustained, is likely to challenge the effectiveness of the
ECB's pledge to keep rates low until a full-fledged recovery is in
place.
On the week, the euro was up 0.4 percent and 0.6 percent firmer
so far in August.
The dollar slipped 0.1 percent to 98.68 yen after hitting a three-
week high of 99.15 yen on the Reuters trading platform.
Despite the pullback, the dollar is still heavily favored by investors
over the yen this year. The gap between two-year U.S. Treasury
yields and their counterpart in Japanese government bonds
moved to the widest since March 2012 and should encourage
more investors in Japan to buy U.S. Treasuries, analysts said.
Sebastien Galy, currency strategist at Societe Generale in New
York, said "there has been a tick-by-tick correlation between
dollar/yen and U.S. bond yields, which has certainly supported that
pair."
On the week, the dollar rose 1.1 percent against the yen. So far
this year, the dollar has gained 13.7 percent against the yen.
The euro rose 0.1 percent to 131.97 yen, after touching a one-
month high of 132.42.
The dollar also fell against other currencies, down 0.2 percent at
0.9211 Swiss franc. The Australian dollar gained 0.3 percent to
#0.9033.
U.S. one-hundred dollar bills are seen in this photo illustration at a bank in Seoul
August 2, 2013. The dollar fell against a basket of currencies on Friday, retreating
from a three-week peak against the yen, as a steep drop in U.S. new home sales
dented expectations that the Federal Reserve will reduce its asset-buying
program next month. REUTERS/Kim Hong-Ji

INTERBANK MARKETS REVIEW
Thomson Reuters Islamic Interbank Benchmark Rate (IIBR)
The IIBR overnight rate dropped on Sunday to 0.183 from 0.200 and the one week rate to 0.240 from 0.250. The one month rate also
decreased to 0.380 from 0.383, the three months rate nudged up to 0.557 from 0.550, the six months rate to 0.706 from 0.700 and the one
year rate dipped to 1.01 from 1.0125 since last week.
Dutch lender Rabobank tots up likely costs of Libor
scandal
By REUTERS
FRANKFURT | Thu, Aug 15
Rabobank RABO.UL, one of several banks named by the authorities
in the international Libor interest rate rigging scandal, has made an
unspecified provision in its first-half results for settling with
regulators.
The Dutch cooperatively-owned bank expects certain regulatory
agencies and authorities to conclude their investigations this year, it
said in a statement on Thursday.
"Taking into account the uncertainties regarding the timing of (the)
conclusion of these investigations, Rabobank has made an estimate
of these settlement amounts," it said.
"The amount of the provision is not disclosed," it added.
Earlier the bank reported a 14 percent drop in its first-half net profit to
1.1 billion euros (£943.9 million), reflecting higher bad debts.
"The Dutch economy remained in recession and the prospects for
recovery continue to be poor," Piet Moerland, chief executive, said in
a statement.
The bank, which reported a full-year net profit of 2.1 billion euros in
2012, has already announced sweeping job cuts, branch closures
and reductions in remuneration packages to save about 1 billion
euros in costs.
About 8,000 domestic retail banking jobs will go by 2016 - reducing
the headcount in those operations by nearly a third to 20,000 from
28,000, while Rabobank said it will close about 300 out of the 800 or
so existing branches of its member banks.
*The Islamic Interbank Benchmark Rate (IIBR) is published at 11 am Makkah time (GMT +3) Sunday
.
#
The London Interbank Offered Rate (LIBOR) is published at 11 am GMT Friday.
Source: Thomson Reuters EIKON <ISL/MONEY>
Thomson Reuters Islamic Interbank Benchmark Rate- IIBR <IIBRFIX>
0.19
0.24
0.35
0.43
0.54
0.70
0.86
0.99
0.117 0.148 0.184 0.226 0.262
0.396
0.000
0.676
0
0.5
1
1.5
2
ON SW 1M 2M 3M 6M 9M 1Y
Yield Curve: IIBR* and LIBOR
IIBR
LIBOR
0.070
0.100 0.170
0.220
0.420 0.3400.470
0.470
0.100 0.170
0.220
0.420
0.340
0.470
0.510
0
0.5
1
1.5
2
2.5
3
ON SW 1M 2M 3M 6M 9M 1Y
Yield Curve: Murabaha and Wakala Rates
Wakala
Murabaha

ISLAMIC FINANCE GATEWAY – WEEKLY BRIEFING
A service of Thomson Reuters and Zawya Islamic Finance Gateway
The contents of this briefing are independently compiled by the Thomson Reuters and Zawya Islamic Finance Gateway Service, a business of the Global Growth and Operations Division.
While material is drawn from Reuters News and other sources, Reuters has not participated in the selection of these articles.
The production of the briefing is supported by the Bahrain Economic Development Board (EDB) and Tamkeen (Labour Fund) as part of their initiatives to promote Islamic Finance in
Bahrain.
Privacy Statement: To find out more about how we may collect, use and share your personal information please read our
Privacy statement.
You may instruct us to remove you from the Thomson Reuters Zawya Islamic Finance Gateway by clicking here.
Thomson Reuters, 3 Times Square, New York, NY 10036, USA
13
Global Islamic Indices Last Net Chng WoW Chng MTD Chng YTD Chng Global Indices Last Net Chng WoW Chng MTD Chng YTD Chng
Thomson Reuters/IR
Islamic GCC Index 143 -0.44 1.40% 2.44% 16.59%
Thomson Reuters GCC
200 -0.08 1.66% 2.78% 25.70%
Thomson Reuters/IR
Islamic MENA Index 128 -0.33 1.33% 2.26% 15.80%
Thomson Reuters MENA
135 -0.08 1.60% 2.60% 23.98%
Thomson Reuters/IR
Islamic Global Index 176 1.17 0.18% 0.23% 8.54%
Thomson Reuters Global
152 1.08 -0.39% -0.67% 8.46%
DJ Islamic Market World 3292 0.00 0.22% 0.45% 9.80% DJ INDU AVERAGE 15011 46.77 -0.47% -3.16% 14.55%
DJ Islamic Sustainability
2826 0.00 0.63% 1.37% 9.07%
DJ Sustainability World
80 Price Index 1493 0.00 -0.94% 0.05% 5.32%
MSCI World Daily PR 1080 6.45 0.12% -0.29% 15.14% MSCI World Price Return 1508 10.69 -0.02% 0.04% 12.70%
S&P500 Shariah 1440 6.37 0.78% -0.66% 14.85% S&P 500 1664 6.54 0.46% -1.32% 16.64%
FTSE4GDB Global 6223 0.00 -0.06% 0.78% 12.10% FTSE100 6492 45.23 -0.12% -1.95% 10.08%
Emerging Markets Islamic
Domestic 932 3.63 -1.11% 1.10% -8.27%
DJIM World Emerging
Markets 1944 3.35 -1.96% -1.11% -9.57%
DJ Islamic GCC 1990 0.13 0.27% 3.32% 20.29% Dow Jones GCC 1806 0.18 0.76% 3.08% 20.13%
DJ Islamic Global Finance
& Takaful 1243 -0.04 0.47% 2.81% 18.38%
DJ Global Financials
199 -0.02 -1.00% -0.57% 9.98%
Thomson Reuters /IR
Islamic Indices Last Net Chng WoW Chng MTD Chng YTD Chng
Thomson Reuters
National Indices Last Net Chng WoW Chng MTD Chng YTD Chng
Malaysia 194.99 -0.45 -3.18% -1.95% 4.18% Malaysia 426.82 0.09 -3.96% -2.68% 6.34%
UAE 155.37 3.05 4.27% 5.01% 59.32% UAE 266.99 1.74 3.01% 4.05% 56.10%
Indonesia 245.48 -0.01 -9.77% -9.08% 4.56% Indonesia 416.36 0.14 -9.74% -10.82% -4.88%
Kuwait 100.67 -0.42 0.49% 0.35% 6.85% Kuwait 123.35 -1.16 -0.06% -0.51% 2.41%
Qatar 206.52 -1.01 2.25% 3.36% 9.32% Qatar 229.20 -0.50 1.59% 3.55% 21.40%
Bahrain 56.59 -0.71 2.18% -0.98% 5.38% Bahrain 111.59 -0.37 0.54% 0.16% 17.12%
Turkey 272.16 -0.75 -6.30% -4.62% 6.16% Turkey 1588.29 -10.81 -7.72% -6.15% -5.55%
Oman 172.26 0.13 1.77% 4.29% 22.01% Oman 123.05 0.28 1.21% 4.39% 18.40%
Egypt 120.25 0.53 1.67% 2.89% -3.04% Egypt 150.00 0.79 2.03% 1.61% -2.17%
Top Performing Sharia-based Companies Last Country Sector 5D Chng YTD Volume
FIRST TAKAFUL FTIK.KW 120 Kuwait Financials 26.32% 84.62% -
STAN CHARTD MD SCMD.KA 15 Pakistan Financials 1.35% 30.43% 17,500
B.R.R. GUARD MOD BRR.KA 4.62 Pakistan Financials -9.59% 50.98% 50,000
CREDIT RATING TAHS.KW 84 Kuwait Industrials -2.27% 115.00% 1,500
Bottom Performing Sharia-based Companies Last Country Sector 5D Chng YTD Volume
ISLAMIC INSUR CO TIIC.AM 1.15 Jordan Financials -5.00% -12.31% -
1ST PAK MOD PAKM.KA 1.4 Pakistan Financials -13.58% -25.13% 1,000
STAN CHARTD MD SCMD.KA 15 Pakistan Financials 1.35% 30.43% 17,500
TAKAFUL-EM/d TKFE.DU 0.64 United Arab Emirates Financials -1.64% 5.61% -
Top Performing Sharia-compliant Companies Last Country Sector 5D Chng YTD Volume
INS BIOSCIENCE INSB.KL 0.065 Malaysia Healthcare 116.67% 85.71% 35,719,900
SURE ENERGY SHR.TO 0.295 Canada Energy 78.79% -49.14% 268,557
TPC MECHATRONICS 048770.KQ 6120 South Korea Industrials 76.37% 230.81% 6,458,850
WESDOME GOLD WDO.TO 0.69 Canada Basic Materials 74.68% -18.82% 75,755
Bottom Performing Sharia-compliant Companies Last Country Sector 5D Chng YTD Volume
VELTI PLC VELT.O 0.35 Ireland Technology -63.16% -92.22% 6,078,135
SPYKER SPYKR.AS 0.3 Netherlands Cyclical Consumer Goods & Services -62.50% -85.00% 128,195
DBA TELECOM/d 3335.HK 2.03 Hong Kong Industrials -49.75% -59.88% -
TOBA PULP LESTAR INRU.JK 600 Indonesia Basic Materials -48.72% -57.14% 17,000
ISLAMIC MARKET INDICATORS
Commodities Last Net Chng WoW Chng MTD Chng YTD Chng
CRUDE APR3 106.32 1.32 -1.06% 1.23% 15.79%
NGAS APR3 3.48 -1.69 3.33% 0.99% 3.85%
GOLD APR3 1396.3 1.82 1.85% 6.38% -16.80%
CRUDE APR3 24.05 3.05 3.10% 22.50% -20.70%
SILVER MAY3 106.32 1.32 -1.06% 1.23% 15.79%
Currencies Last Bid Net Chng WoW Chng MTD Chng YTD Chng
Euro 1.338 0.00 0.38% 0.60% 1.41%
Japanese Yen 98.69 0.03 1.20% 0.85% 13.78%
GB Pound 1.5569 0.00 -0.37% 2.39% -4.20%
Swiss Franc 0.9218 -0.00 -0.49% -0.46% 0.69%
Australian Dollar 0.9025 0.00 -1.69% 0.50% -13.16%
Indian Rupees 63.19 -1.36 2.50% 3.86% 14.91%
Malaysian Ringgit 3.3 -0.01 0.76% 1.69% 7.95%
Bonds (Top Benchmarks) Bid Yield Net Chng WoW Chng MTD Chng YTD Chng
US5Y 1.6233 0.00 3.99% 17.12% 123.90%
US10Y 2.8183 0.00 -0.24% 8.90% 60.40%
EU5Y 0.903 0.01 11.48% 36.82% 216.84%
EU10Y 1.939 0.01 3.41% 15.69% 48.58%
ES5Y 3.459 0.05 4.12% 4.41% -14.80%
IT5Y 3.182 -0.00 4.43% -2.48% -5.16%
GR10Y 10.148 0.03 4.44% 1.19% -14.88%
PT5Y 6.206 -0.09 3.97% 5.15% 19.97%

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