A total of eight Basel III compliant sukuks have been issued raising USD 4.93 billion in proceeds for seven different issuing banks since November 2012, a specialized report revealed Friday.
“To date, a total of eight Basel III compliant sukuks have been issued raising USD4.93bln in proceeds for seven different issuing banks,” reads the Kuwait Finance House’s Global Sukuk Weekly Report.
“By domicile, Saudi Arabia accounts for 48 percent of the total Basel III sukuk outstanding; UAE 41 percent and most recently, Malaysian Islamic banks have begun to issue Basel III compliant sukuks and account for 11 percent outstanding.” The report stated that the gradual implementation of Basel III accords since 1st January 2013 has led to Islamic banks turning towards issuing Basel III compliant sukuk instruments in order to satisfy the revised capital standards.
The world’s first Basel III compliant sukuk was issued in November 2012 by Abu Dhabi Islamic Bank (ADIB) in UAE. Encouraged by ADIB’s performance, Dubai Islamic Bank (DIB) followed suit with a similar Basel III AT1-compliant USD1bln sukuk on 20th March 2013.
Islamic banks in Saudi Arabia followed next with three issuances, each by Saudi Hollandi Bank (SAR2.5bln on 15th December 2013); Saudi British Bank (SAR1.5bln on 17th December 2013); and most recently National Commercial Bank (SAR5bln on 20th February 2014).
Malaysian banks have only recently begun to tap the Basel III sukuk market and AmIslamic was the first Malaysian Islamic bank to issue a Basel III compliant sukuk meeting Tier 2 requirements.
AmIslamic issued its first Tier 2 tranche on 28th February this year worth MYR200mln followed by a second tranche worth MYR150mln on 25th March. Maybank Islamic followed suit and issued MYR1.5bln Basel III Tier 2 sukuk on 7th April. Public Islamic and RHB Islamic have also announced their Basel III compliant Tier-2 sukuk and these are in the pipeline for issuance this year.
Source : KUNA Kuwait News agency
