Fitch rates Turkey’s USD Sukuk ‘BBB-‘

Fitch Ratings has assigned Hazine Mustesarligi Varlik Kiralama Anonim Sirketi’s (Hazine) USD1.5bn of global certificates (Sukuk), due 26 March 2018, a ‘BBB-‘ rating. The certificates have a profit rate of 2.803%.
Hazine, an asset leasing company incorporated solely for the purpose of participating in this transaction, is wholly owned by the Republic of Turkey, acting through the Undersecretariat of the Treasury.
The rating reflects Fitch’s judgement that the Sukuk can be considered an unconditional, unsubordinated and general obligation of the Republic of Turkey, ranking equally with Turkey’s other senior unsecured obligations. The rating is therefore in line with Turkey’s Long-term foreign currency Issuer Default Rating (IDR) of ‘BBB-‘ on which the Outlook is Stable.
The Sukuk follows an ijara’ (leasing) structure. The issuer has purchased publicly-owned real estate from the Republic of Turkey using the proceeds from the Sukuk. These assets have been leased back to the Republic for a period equal to the tenor of the Sukuk; in return the Republic makes semi-annual rental payments to the issuer at least equal to periodic distribution amounts made by the issuer to the Sukuk investors.
The transaction documents incorporate a purchase undertaking requiring the Republic to repurchase the assets on maturity (or earlier, in the event of dissolution/default), together with any outstanding distribution. Certificates are unsecured and certificate holders have no direct recourse to the lease assets.
While certain transaction documents relating to this issue, being governed by English law, may not be enforceable under applicable law, including Turkish law, Fitch’s rating for the certificates reflects the agency’s belief that the Republic of Turkey would stand behind its obligations under the transaction documents.
By assigning a rating to the certificates, Fitch does not express an opinion on the Sukuk structure’s compliance with Sharia principles.
Source: bne

A Detailed Look at the Fast-Growing Islamic Banking and Finance Sector

Press release
September 26, 2012
Hoboken, NJ
A Detailed Look at the Fast-Growing Islamic Banking and Finance Sector

The severity of the global financial crisis that followed the years 2008 and 2009 has been described as second only to the Great Depression. Yet, during those two years, the assets of the 500 top Islamic financial institutions grew — from $639 billion to $820 billion.

What sets apart the Islamic finance industry from the rest of the financial world? And how have its differences helped this sector thrive when the rest of the global financial market struggles to regain its balance?

Faleel Jamaldeen, author of Islamic Finance For Dummies, says: “I’m bullish on Islamic finance: I’m a firm believer in the market potential of this industry. I’m also a firm believer in the benefits of Westerners understanding the concepts that lie behind the Islamic financial products — knowing why a separate industry exists and why many conventional products don’t work for Muslims.”

“In the West, the general public and even many financial professionals know absolutely nothing about Islamic finance. Those who’ve at least heard of it may assume that they can’t understand or participate in it because they aren’t Muslim and don’t speak Arabic.) Western women may assume that they aren’t allowed to participate in the Islamic finance industry because of misconceptions about Islamic law. (Women can and do fully participate in Islamic finance — as professionals and as investors.)”

“Islamophobia is a prejudice against Islam or Muslims that has unfortunately become more commonplace and more intense in the West since the attacks on the United States on September 11, 2001. Some people simply don’t want anything to do with an industry that’s affiliated with Islam. Until now, searching for a book to help you navigate the subject of Islamic finance wasn’t very rewarding. That’s because Islamic finance has been the topic of textbooks but not many nonacademic titles.”

Jamaldeen goes on to say, “I wrote this book to bridge the gap between people who need and want to know about Islamic finance and an industry that needs and wants their participation. You’ll find that you don’t need to learn a new language, change your personal religious views, and that job prospects are strong for both men and women with conventional banking and finance skills who are open to learning about new products and a new way of conducting business.”

“I wrote this book assuming that you have a strong interest in the financial industry already. Maybe you’re a banker, a mutual fund manager, an investment consultant, or an insurance agent. Perhaps you have Muslim clients asking you to consider adding sharia-compliant products to your roster of offerings, or your boss mentioned in passing that Islamic finance has been growing like crazy and your company should find out how to tap into the market. Maybe you’re a college student focusing your studies in finance, and you’ve read that job prospects are good for people with specific knowledge about Islamic finance.”

Whatever the scenario, you’ll find clear and easy-to-understand information on how the Islamic finance industry works.

source : wiley.com

Aircraft investment, Islamic finance key to growth: Boeing

source : traveldailymedia

Boeing Capital Corporation ‘BCC’ stressed on the need for airline to invest strategically into new aircraft and the long-anticipated growth of Islamic financing’s role in commercial airplane deliveries is also coming to fruition. Airplanes have been regarded as ideal for lending under Shariah law given their mobile nature and asset attractiveness.

These discussions were highlighted as financial institutions and airlines in the Middle East have significantly increased their capital investments in new Boeing commercial airplanes over the past two years, thus realizing substantial rewards for their investors as demand for new airplanes continues to expand.

“The region historically has seen about 20% of its deliveries funded by its own capital sources. That turned up to more than 30% in 2011, and, for 2012, it’s heading to nearly 60%,” said Rich Hammond, a BCC senior director in the region.

Read more : http://www.traveldailymedia.com/138359/aircraft-investment-islamic-finance-key-to-growth-boeing

Can Islamic banking help boost Czech exports?

A good deal of the ongoing economic and financial turmoil on world markets has been blamed on the unscrupulous practices of the international banking and financial sector. Islamic banking, on the other hand, is seen as a fairer and more balanced alternative which has been much less affected by the crisis. Can the Czech Republic benefit from a financial system based on the Islamic law? And can Islamic banking help boost Czech exports into Muslim countries? These are some of the issues debated at an international conference on Islamic banking held in Prague.

Based on the principles of Islamic law, or shariah, Islamic banks are prohibited from charging interests, speculating as well as investing in businesses considered unethical by Islamic scholars. Instead, Islamic or participant banking offers a system of shared risks and profits, and its supports claim it is committed to promoting equity, moderation and social justice.

Islamic banking is today the fastest growing segment of the financial system, and is also considered a more honest and fairer alternative to conventional banking. Cihad Erginay is the Turkish ambassador to Prague, and head of the local group of the Organisation of Islamic Cooperation which organized the event.

“There was great interest on the subject from our Czech colleagues, Czech bankers and journalists who kept asking us about it and expressed their interest because they saw that Islamic banks were not as affected by the economic crisis that we see today. That led us to think that it could be interesting to organize such a conference. And as you can see from the participation, there is great interest in the subject.”

source : Radio Prague
Read more at :

http://www.radio.cz/en/section/marketplace/can-islamic-banking-help-boost-czech-exports

Islamic Bank of Britain host UK’s first ‘Islamic Finance Question Time’

Islamic Bank of Britain plc (IBB) held a question and answer session hosted by the Bank’s Shari’a scholars, ‘Islamic Finance Question Time’ on April 23. The aim of the event was to “demystify Islamic finance and provide an insight into how it offers a faith-based alternative to conventional finance and banking,” according IBB spokesperson.

IBB’s Sharia Supervisory Committee (SSC) consists of esteemed Shari’a scholars, Sheikh Dr Abdul Sattar Abu Ghuddah, Sheikh Nizam Muhammed Saleh Yaqoobi and Mufti Abdul Qadir Barkatulla.

Commenting on the event, Chairman of the IBB SSC, Sheikh Abu Ghuddah, said, “Islamic finance is as old as the religion of Islam itself. However, there is still a lot of misunderstanding around how it works and the need for Muslims to manage their finances in Shari’a compliant manner. The IBB SSC hopes the Islamic Finance Question Time event has shed some light on the matter and gone some way to encouraging the further take-up of Shari’a Finance amongst the Muslim community.”

Senior Manager, Sharia Compliance at IBB, Samir Alamad, who works closely with the IBB SSC on a day to day basis, also commented, “The feedback from attendees of Islamic Finance Question Time has been very positive. The public welcomed the opportunity to engage with the IBB SSC so openly. The event is the first time a UK Islamic bank has given open access to its SSC, and this reflects the open and transparent way the Bank works with its customers.”

Over 150 guests attended the event, held in central London for a debate lasting over 1.5 hours. Of the questions, the following generated a lively and informed discussion amongst the panel and their guests:

Read more at :

http://www.muslimnews.co.uk/paper/index.php?article=5838

Islamic banking could be perfect fit for Scotland – Omar Shaikh, of the IFC

YOU cannot mask what has happened to the banking industry over recent years. Alongside the near collapse of our biggest banks, there has been a disintegration of trust.

It has spurred many of us from the worlds of business, the churches and academia to explore new models of financial institution that bring together Islamic and ethical banking for a more socially-focused view of lending.

Today the Tods Murray/Islamic Finance Council UK (IFC) ethical finance forum will look at the practical challenges relating to marketing and distribution and discuss methods for measuring social returns.

Over recent weeks, these discussions have become even more pertinent against the backdrop of constitutional reform. Scotland’s monetary system is being hotly debated.

We strongly believe the shared values between Islamic finance, the churches and broader ethical banking could provide the bedrock to a more stable and prudent banking sector whatever the outcome of a referendum, and no less so were Scotland to become independent.

We would not want to be in a similar situation to Ireland trying to bail out our banks. IMF studies have shown Islamic banks are more stable than their conventional counterparts and we need to see what we can learn from this to mitigate systemic risk.

Scotland has a tremendous heritage for ethical and prudent finance from the original mutual investment trusts to the Savings Bank movement. Indeed the Savings Bank structure inspired the first attempt at a modern Islamic bank in Egypt more than 40 years ago.

This is also a nation for innovation. In a brave, new world, the Scottish banking system has the opportunity to once again show moral leadership giving the people of Scotland a fair, socially responsible bank system that works for them and ensures Scotland can withstand any future financial crisis.

Many people are already basing their financial decisions on moral considerations, there is a growing appetite for ethical trading and there is an expanding sector of society who will choose social over purely financial returns. That is worth building on.

read more at http://www.scotsman.com/news/omar-shaikh-islamic-banking-could-be-perfect-fit-for-scotland-1-2172994/

The stranger bits of Finance Bill 2012: from cricket to Islamic finance

THE FINANCE BILL 2012 was published yesterday by Minister for Finance Michael Noonan and among the Mortgage Interest Relief measures and tax changes for businesses, the Bill also clarified the following (more unusual) elements of Irish taxation:

1. Bread

The Finance Bill 2012 clarifies the range of bread products, including bagels and blaas, which will not be liable for VAT and will instead remain designated at a zero rate of tax.

The zero-rated breads include loaves, rolls, batch bread, bagels, baps, blaas, burger buns, finger rolls, wraps, naan breads and pitta bread.

Other flour- or egg-based bakery products are subject to VAT of 13.5 per cent.

The Department of Finance said that the breads listed above are being designated zero-rated for tax in an effort to reflect the kinds of bread currently available on the market while taking into account the development of bread for health and ethnic reasons.

2. Cricket

The Finance Bill had some good news for professional cricket players: they are being added to the list of professional sportspersons entitled to tax relief on certain income.

The move also means that the cricketers will be eligible for a higher rate of relief on pension contributions.

Other sportspersons covered by this are: athletes, boxers, cyclists, golfers, motor racing drivers, footballers, rugby players, swimmers, jockeys, and tennis, squash and badminton players.

They must be resident in the state for the relevant tax assessment period to qualify and the deduction only applies to direct sports earnings (less expenses) and not for indirect income earned through promotional appearances or sponsorship.

3. Islamic Finance

The Finance Bill also includes enhancements to the tax regime for Islamic finance.

This area of finance in Ireland, which although faith-based is not limited to Muslims, was introduced in the Finance Act 2010, and refers to financial transactions which are consistent with the principles of Islamic or Sharia law.

Under Islamic finance, the payment and receipt of interest is forbidden. Speculation is also prohibited, while investment in unethical businesses, products or services is also banned. According to the Revenue Commissioners, under Islamic finance, transactions are typically backed by or based on an identifiable and tangible underlying asset.

The transactions also involve sharing risk between the investor and the investee, and products under Islamic finance operate along the same lines as conventional financial products by using familiar legal structures in an alternative way to achieve the financing objectives.

The Finance Bill published yesterday proposes technical changes to certain Islamic financial transactions in the same way as conventional financial transactions by allowing such a company to have other income in addition to income from leasing and/or income from specified financial transactions.

source : the journal.ie