Senai-Desaru, IDB, Indonesia Plan Issuance: Islamic Bond Alert

The following borrowers are expected to sell Islamic bonds, which use asset returns to pay investors to comply with the religion’s ban on interest.

Global sales of sukuk fell 17 percent to $11.6 billion so far this year from the same period in 2009, the lowest in four years, according to data compiled by Bloomberg. Issuance totaled $20.2 billion last year, up from $14.1 billion in 2008.

SENAI-DESARU EXPRESSWAY BHD.: The operator of Malaysia’s third-longest highway in the state of Johor plans to issue as much as 1.15 billion ringgit ($370 million) of Islamic medium- term notes to bondholders in November as part of its debt restructuring program, Chief Executive Officer Mustaza Salim said in an interview today. The new issue includes debt with maturities ranging from one year to 20.5 years, according to a company statement yesterday.

CAGAMAS BHD.: Malaysia’s national mortgage company may sell more Islamic bonds this year or next following a sale in August under its 5 billion ringgit Sukuk al-Amanah Li al-Istithmar program, Chief Executive Officer Steven Choy said today. The company sold 1 billion ringgit on Aug. 18. The sale was managed by Al Rajhi Banking & Investment Corp. (Malaysia) Bhd., RHB Investment Bank Bhd. and the Royal Bank of Scotland Group Plc.

ISLAMIC DEVELOPMENT BANK: The Jeddah-based multilateral lender plans to sell $1 billion of five-, seven- and 10-year sukuk in the fourth quarter under its $3.5 billion Medium-Term Note program to fund development projects in its member countries, Vice President Abdul Aziz Al Hinai said. The bonds will be listed in London and Kuala Lumpur. The bank hired CIMB Holdings Bhd., the world’s top sukuk arranger, Citigroup Inc., HSBC Holdings Plc and Standard Chartered Plc to manage the sale, two people with knowledge of the issuance said yesterday.

NAKHEEL PJSC: The property unit of Dubai World, may issue as much as $3.2 billion of five-year sukuk to pay contractors as part of its debt restructuring plan, JPMorgan Chase & Co. said in a report Aug. 26. The bond to be issued against trade claims is estimated to have a fair value in the low 60 cents to the U.S. dollar, it said. The developer aims to settle 1.5 billion dirhams ($408 million) it owes to contractors in September, Chairman Ali Lootah was cited as saying by the Al Bayan newspaper on Aug. 30. Nakheel is in preliminary talks with Nasdaq Dubai to list Islamic bonds, Chairman Ali Rashed Lootah told reporters in Dubai this week without providing details.

MALAYSIA DEBT VENTURES BHD.: The venture capital firm owned by the Ministry of Finance plans to sell as much as 500 million ringgit of sukuk in September or October next year to fund investments in technology projects, said Chief Executive Officer Md. Zubir Ansori Yahaya. The company sold a similar amount last month.

ALBARAKA BANKING GROUP: The largest publicly traded Islamic bank in Bahrain expects to raise $200 million from the sale of Shariah-compliant bonds before the end of the year, using Standard Chartered Plc as one of the managers, Chief Executive Officer Adnan Ahmed Yousif said last month. The bank’s unit in Egypt may sell dollar-denominated bonds in the second half of next year, he said last week.

ARAB PETROLEUM INVESTMENTS CORP.: The energy investment unit of the Organization of Arab Petroleum Exporting Countries, plans to sell a Saudi riyal-denominated benchmark-sized bond as the company expands in the kingdom, the company said last month. It didn’t say whether the debt will be Islamic.

INDONESIA: Southeast Asia’s largest economy plans to sell 2 trillion rupiah ($224 million) of Islamic bonds to the Ministry of Religious Affairs in October, said Rahmat Waluyanto, a director at the Ministry of Finance. It will separately offer 1 trillion rupiah of sukuk through an auction today. The government may also sell Islamic debt in the overseas market in the first half of 2011 and for individual investors in the first quarter, he said.

KONSORTIUM LEBUHRAYA UTARA-TIMUR: The owner of the Duta-Ulu Kelang Expressway in Malaysia plans to offer creditors as much as 780 million ringgit of sukuk this month to replace existing debt as part of the company’s restructuring program, the company said in an e-mail.

TURKEY: Citigroup Inc. plans to arrange more sales of Islamic bonds from Turkey after managing a $100 million issue for Kuveyt Turk Katilim Bankasi AS, said Hulusi Horozoglu, director of global Islamic banking at Citigroup. Kuveyt may sell more than $100 million of five-year sukuk in 2012, the company’s Chief Executive Officer Ufuk Uyan said on Aug. 25. The Turkish government may consider selling yen-denominated bonds or Islamic securities, Emre Balibek, the Treasury’s deputy general director for public finance said in June. Turkey is rated Ba2 by Moody’s Investors Service and BB by Standard & Poor’s.

PAKISTAN: The South Asian country plans to sell sukuk maturing in a year or less in the domestic market, according to an e-mailed statement from Syed Wasimuddin, a spokesman for State Bank of Pakistan, the nation’s central bank. It didn’t give further details.

SUDAN: The African nation will delay the sale of $300 million of Islamic bonds until next year as it waits for global markets to recover from the economic crisis, central bank Governor Sabir Mohamed Hassan said. Sudan had previously planned the bond sale before the end of this year.

KAZAKHSTAN: The former Soviet republic that last sold debt overseas in 2000 is planning a debut Islamic bond sale this year to broaden its investor base, said Aibek Bekzhanov, head of Islamic instruments at the Regional Financial Center of Almaty.

PHILIPPINES: State-owned Al-Amanah Islamic Bank is looking to sell the nation’s first Islamic bonds, the lender’s President Armando Samia said in July, without giving the size or timing. The proposal is at a “very exploratory stage,” he said.

THAILAND: The Islamic Bank of Thailand, the nation’s only bank to comply with Shariah law’s ban on interest, plans to sell 5 billion baht ($163 million) of Islamic bonds in the fourth quarter to expand lending. The sukuk will be offered to local investors and may have maturities of five or seven years, President Dheerasak Suwannayos told reporters.

JORDAN: Jordan may sell $500 million of conventional or Islamic bonds internationally to help the government with its finances and take advantage of low borrowing costs, Finance Minister Mohammad Abu Hammour said, without specifying the size and timing of the sale. The country is rated Ba2 by Moody’s and BB by S&P.

AHMED SALEM BUGSHAN GROUP: The Saudi Arabia-based company, known as ASB, plans to raise as much as $100 million selling five-year Islamic bonds to fund projects including a mega-steel plant and a real-estate development, Mohamed H. Zakaria, senior vice president of the group, said in an e-mailed statement. The bond will offer a semi-annual return of 125 basis points more than six-month Libor, the rate banks charge each other on loans. ASB may ask Fitch Ratings or S&P to rate the debt, he said.

SAUDI ELECTRICITY CO.: The Arab world’s largest utility company may issue global sukuk in 2011 after April’s sale of 7 billion riyal ($1.87 billion) of Islamic notes, according to Executive Director of Treasury Fahad Alsudairy.

KENCANA PETROLEUM BHD.: The Malaysian oil and gas contractor will sell 250 million ringgit of Islamic bonds this year to help finance vessel purchases. State bond insurer Danajamin Nasional Bhd. agreed to guarantee the notes, allowing them to have the highest AAA rating for local bonds.

WAHA CAPITAL PJSC: The Abu Dhabi-based investment and leasing company said its shareholders approved a plan to issue mandatory convertible bonds or sukuk worth 1 billion dirhams to strengthen its finances and support expansion plans.

VTB BANK OJSC: VTB Bank plans to sell Islamic bonds worth about $200 million in the second half of the year, Reuters reported in April, citing an unidentified person familiar with the plan.

EMIRATES INTEGRATED TELECOMMUNICATIONS CO.: The Dubai-based phone operator known as Du, may consider selling Islamic bonds in coming years to fund expansion, Chief Executive Officer Osman Sultan said in April without disclosing the amount.

LAFARGE MALAYAN CEMENT BHD.: Malaysia’s largest cement maker will sell as much as 350 million ringgit of Islamic bonds under a seven-year program to fund expansion, the company said March 26. The debt is rated AA2 by RAM Rating Services Bhd., its third-highest ranking for long-term corporate debt instruments.

SAUDI ARABIAN OIL CO.: Saudi Aramco, the world’s largest state-owned oil company, and Total SA expect to raise $8 billion in debt financing for a joint refinery and petrochemical project in the “coming months,” according to Saleem Shaheen, chief executive officer of Saudi Aramco Total Refining and Petrochemical Co. The debt package will include the sale of Islamic bonds, he said.

LEBANON: Lebanon may sell Islamic bonds in 2011, according to the central bank in February. The country has more than $2 billion of dollar-denominated debt maturing this year, according to data compiled by Bloomberg. It is rated B2 by Moody’s, five levels below investment grade.

To contact the reporters on this story: Soraya Permatasari in Kuala Lumpur at soraya@bloomberg.net;

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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