The Saudi Real Estate Refinance Company (SRC), a subsidiary of Saudi Arabia’s Public Investment Fund (PIF) has noted that almost 40% of new mortgages in Saudi Arabia were financed through Murabahah, or cost-plus financing in year 2019, whilst anticipating the same to grow further in year 2020. Addressing an SRC-organised Islamic finance panel on Murabahah, Saudi Arabia’s Minister of Housing, Majid Al-Hogail, stated that improving homeownership is a vital component of Saudi Arabia’s Vision 2030, aiming to increase homeownership level t...

To step up efforts to boost the struggling economy during the COVID-19 pandemic, Bank Indonesia (BI) announced a 25 basis point (bps) reduction in the benchmark 7-day reverse repurchase rate to 4.00% on the 16th of July 2020. This is the fourth rate cut in 2020 and the lowest since 2016.  In addition, BI also lowered the deposit and lending facility rates by 25 bps each, resulting in rates of 3.25% and 4.75% respectively. The reduction in benchmark rate is expected to result in lower interest rates charged by banks on consumer loans, mortgages, corporate lo...

The Federal Land Development Authority (FELDA) is in discussions with the Ministry of Finance (MoF) of Malaysia to issue government guaranteed Sukuk worth MYR 2.5 billion to fund loan restructuring, according to local media reports.  The announcement was made by Datuk Seri Mustapa Mohamed, Minister in the Prime Minister's Department (Economy) at the Dewan Rakyat on the 16th of July 2020.  According to local media, this will be FELDA’s second Sukuk issuance, following its debut issuance in 2018 worth MYR 2 billion.  This is a follow-up to the go...

Nomura’s Head of Global Macro Research, Rob Subbaraman, stated that the two main risks facing Malaysia are the country’s higher exposure to exports as well as limited fiscal space (coupled with a relatively high level of government debt). Nomura cautioned investors against Malaysia’s higher risk premium, given its fiscal position. According to Subbaraman, since Malaysia is an open economy, it is rather exposed to global weaknesses, relative to other countries in Asia, and therefore, is more vulnerable to sovereign credit rating d...

CIMB Bank and CIMB Islamic Bank have launched two digital-first solutions for its customers, in order to increase accessibility of banking offerings, and offer safety by leveraging digital capabilities. Offering an online-to-branch account opening process for individual banking customers, an account-opening form can now be filled on the corporate website to initiate the procedure, this being supported by a dedicated e-account opening priority lane at all branches for customers to complete the process.  Small and Medium Enterprise (SME) customers will...

The Islamic Development Bank (IsDB) recently announced a new partnership with the United Nations Office for Project Services (UNOPS) to support IsDB member countries with scaling up their health capacity to combat COVID-19, through emergency procurement services of medical supplies and equipment.  The UNOPS, which is the operational arm of the United Nations (UN), is the first UN organization to be included in IsDB’s COVID-19 Global Coordination Platform to facilitate health procurement services. The platform was created to provide enhanced effic...

Sultan Ahmed Bin Sulayem, Group Chairman and Chief Executive Officer of DP World, a global supply chain solutions provider based in Dubai, United Arab Emirates (UAE), marked the listing of DP World’s USD 1.5 billion inaugural perpetual Sukuk by ringing the market opening bell at Nasdaq Dubai.  According to a press release issued by Nasdaq Dubai, DP World plans to use the capital raised by the perpetual Sukuk issuance, which is the largest hybrid Sukuk offering on the region’s international exchange, to grow and refinance debt. DP World is the largest UAE...

Moody’s Investors Service (Moody’s) has affirmed Islamic Development Bank (IsDB)’s Aaa issuer rating, with a Stable Outlook. Meanwhile, the IsDB’s short-term issuer rating was affirmed at Prime-1 by Moody’s.  According to Moody’s, the Aaa rating is reflective of IsDB’s robust risk profile over the medium-term, which is supported by a sound liquidity position, a strong capital base, shareholders resilient capacity to support, as well as a low – albeit rising – leverage ratio. Furt...

Axiata Group (Axiata), Malaysia’s largest wireless carrier, is contemplating a global bond offer of up to USD 1 billion (MYR 4.26 billion) which potentially could be in the form of Sukuk for funding requirements, according to local media reports.  If confirmed, this is slated to be Malaysia’s largest corporate offering of Sukuk since 2015, when Petroliam Nasional (Petronas) made its Sukuk issuance. According to the IslamicMarkets Sukuk Monitor, Petronas sold USD 1.25 billion of Sukuk notes in March 2015 with a profit rate of...

The Government and House of Representatives of Indonesia have agreed to set the 2021 state budget deficit at up to 4.7% of gross domestic product (GDP), with the aim of supporting economic recovery following the COVID-19 pandemic.  According to Muhidin Mohamad Said, Vice Chairman of the House Budget Committee of Indonesia, the budget deficit is expected to reach 3.21% - 4.17% of GDP in 2021, but the government has the option to widen the fiscal deficit to 4.7% if necessary, in order to fully support the economic recovery, boost human development, as well as increase indus...