Albaraka Banking Group BSC’s units in Egypt and Turkey are planning to sell Islamic bonds and seek a Shariah-compliant syndicated loan, Chief Executive Officer Adnan Ahmed Yousif said.
Al Baraka Bank Egypt ESC, the group’s Cairo-based arm, expects to raise 1 billion Egyptian pounds ($168 million) from the sale of 10-year Islamic bonds this summer. In Istanbul, Albaraka Turk Katilim Bankasi AS plans to raise $200 million with a murabaha Islamic syndicated loan, Yousif said in a telephone interview yesterday.
The lender in Egypt has “begun the sale of the floating-rate sukuk this month, and we will keep the sale open for another three months,” Yousif said. In Turkey, “we will award banks with the mandates for the contracts either this week or next week,” he said. The units are raising the capital to help “restructure liabilities” and finance “growth plans,” he said.
The funding plans come after Albaraka Banking delayed the sale of a $300 million sukuk to September from April after the uprisings in the Middle East raised the cost of borrowing. The average yield on sukuk in Persian Gulf Arab countries jumped to a five-month high on Feb. 28. It has since dropped 190 basis points to a five-year low of 4.15 percent yesterday, according to HSBC/NASDAQ Dubai GCC US Dollar Sukuk Index.
Al Baraka Egypt’s sukuk, which can be redeemed after six months, will pay an annual profit rate, Manama-based Yousif said, declining to give a percentage. They won’t be tradable, “but we are talking to the central bank about amending this so that they can trade on the stock exchange,” he said.
The Egyptian Financial Supervisory Authority agreed in principle on June 6 on a law allowing for the sale and trade of Islamic bonds in the North African country. The draft law will be discussed with “experts” before it is sent to the cabinet for approval, it said on its website. Al Baraka Egypt’s plan to sell $100 million of dollar-denominated Islamic bonds before year-end hasn’t changed, Yousif said.
In Turkey, the Islamic syndicated loan will be the bank’s second, according to Bloomberg data. The Istanbul-based lender got a $240 million, one-year murabaha Islamic syndicated loan in September. The bank’s Chief Executive Officer Fahrettin Yahsi said in March the lender plans to borrow about $300 million via a syndicated loan in June. Albaraka Turk also plans to sell $180 million in Islamic bonds before mid-July, Yahsi said in June.
Shares of Al Baraka Bank Egypt retreated 1.7 percent to 11.36 Egyptian pounds yesterday. The shares have declined 8.8 percent this year, outperforming the benchmark EGX 30 Index, which has fallen 24 percent. Albaraka Turk shares were unchanged at 2.26 Turkish liras yesterday.