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Mideast debt issuers warm to cross border sukuk


May 30 Growth in cross-border Islamic bond issues points to greater convergence in an industry that has been divided by tensions between the Middle East and Asia over sukuk rules, opening the door to a much wider pool of investors. The Islamic finance industry is centred in the Middle East and southeast Asia, but for the most part those regions have developed independently of each other. The past year, however, has seen a number of cross-regional sukuk, mostly by Gulf issuers tapping Malaysia's highly liquid market, the world's biggest for sukuk issuance. Malaysia's sovereign wealth fund has also launched a Chinese yuan sukuk."Diversification of funding sources is extremely important, that is a big driver for cross-border sukuk," said Ahmed Abbas, chief executive of Liquidity Management Centre, a Bahrain-based Islamic investment bank. National Bank of Abu Dhabi tapped the Malaysian market with a 15-year, 500 million ringgit ($164.4 million) sukuk in November, its third issue in that currency. Bahraini sovereign wealth fund Mumtalakat issued a five-year, 300 million ringgit sukuk in September. Sukuk are investment certificates which follow religious guidelines, including a ban on interest and pure monetary speculation, and pay a profit rate based on an underlying asset rather than an interest rate as in the case of conventional bonds. However, their structures are not standardised, and some Gulf-based sharia scholars have objected to certain structures used in Asia, a region which has proven to be more flexible in its transactions."Malaysia and Singapore are far more open and forgiving on sharia aspects," Abbas said. In the latest cross-border sukuk, Al Bayan Group, a private holding company, became the first issuer from conservative Saudi Arabia to tap the Malaysian market, with a small 200 million ringgit ($65.7 million) private placement last month.

TURKEY ATTRACTIVE The development of sharia-compliant hedging tools is making it easier for issuers to invest in foreign currency assets, said Ijlal Ahmed Alvi, chief executive of Bahrain-based International Islamic Financial Market (IIFM), an industry body which develops specifications for Islamic finance contracts. Last year, IIFM launched a standard contract template for Islamic profit rate swaps, with others in the pipeline including cross-currency swaps and FX forwards, Alvi said. Sukuk issuance in the Middle East outside of the Gulf is also becoming more attractive, notably Turkey, which was recently elevated to investment grade credit status and is bidding to develop an Islamic finance industry."Turkey is a market to watch - they are developing their regulations to allow issuers to use a variety of sharia structures," said Alex Roussos, counsel at law firm Norton Rose in Dubai.

"Turkish issuers are highly attractive credits for international investors."Cross-border issuance is benefiting from clarity on the legal documentation required for such transactions."In terms of global offerings, sukuk will continue to be predominantly English law-governed because of the certainty and predictability that this legal system offers," Roussos said."North African countries I believe will make their presence felt during 2013/2014 as they are nearing completion of the process of creating the legal infrastructure that will enable their sovereigns to tap the markets."Egypt this month announced a $12 billion bond programme that will include sukuk issuance in early 2014, which would be Irish-listed and governed under English law.

YUAN ISSUES Malaysian issuers have started testing other currencies, in particular the Chinese yuan, although they have yet to tap the Gulf market."Cross-border issuance has been one-way traffic, mostly to tap Malaysian liquidity, but conceptually there is nothing wrong with the other way around," said Sabeen Saleem, chief executive of the Bahrain-based Islamic International Rating Agency. Malaysian telecom firm Axiata issued a two-year, 1 billion yuan ($163.22 million) sukuk in September, following on the heels of Malaysia's sovereign wealth fund Khazanah Nasional , which issued a 500 million yuan sukuk in 2011. Malaysia is also promoting overseas investment by its takaful firms (Islamic insurers) as it seeks to internationalise its Islamic finance industry. To encourage cross-border Islamic business, the Malaysian government has said takaful firms will be allowed to invest abroad without limit, lifting a current requirement for them to hold at least 80 percent of assets locally. These firms, with 19 billion ringgit ($6.1 billion) of total assets as of the end of last year and 60 percent of it in debt securities, are major investors in domestic sukuk. Any shift into foreign-denominated issuance could open the sukuk market to an additional pool of liquidity, although takaful firms are highly risk averse and may be reluctant to expand into new markets too quickly. ($1 = 6.1267 Chinese yuan)

Millions in cia ghost money paid to afghanistan presidents office nyt


Tens of millions of U.S. dollars in cash were delivered by the CIA in suitcases, backpacks and plastic shopping bags to the office of Afghanistan President Hamid Karzai for more than a decade, the New York Times says, citing current and former advisers to the Afghan leader. The so-called "ghost money" was meant to buy influence for the Central Intelligence Agency (CIA) but instead fuelled corruption and empowered warlords, undermining Washington's exit strategy from Afghanistan, the newspaper quoted U.S. officials as saying."The biggest source of corruption in Afghanistan", one American official said, "was the United States."The CIA declined to comment on the report and the U.S. State Department did not immediately comment. The New York Times did not publish any comment from Karzai or his office."We called it 'ghost money'," Khalil Roman, who served as Karzai's chief of staff from 2002 until 2005, told the New York Times. "It came in secret and it left in secret."There was no evidence that Karzai personally received any of the money, Afghan officials told the newspaper. The cash was handled by his National Security Council, it added. In response to the report, Karzai told reporters in Helsinki after a meeting with Finnish leaders that the office of the National Security Council had been receiving support from the U.S. government for the past 10 years. He said the amounts had been "not big" and the funds were used for various purposes including assistance for the wounded.

"It's multi-purpose assistance," he said, without commenting on the report's claims the funds fuelled corruption and empowered warlords. However, Afghan Foreign Ministry spokesman Janan Mosazai told reporters in Kabul that there was no proof or evidence to back up the claims in the story. For more than a decade the cash was dropped off every month or so at the Afghan president's office, the New York Times said. Handing out cash has been standard procedure for the CIA in Afghanistan since the start of the war.

The cash payments to the president's office do not appear to be subject to oversight and restrictions placed on official American aid to the country or the CIA's formal assistance programs, like financing Afghan intelligence agencies, and do not appear to violate U.S. laws, said the New York Times. U.S. and Afghan officials familiar with the payments were quoted as saying that the main goal in providing the cash was to maintain access to Karzai and his inner circle and to guarantee the CIA's influence at the presidential palace, which wields tremendous power in Afghanistan's highly centralized government. Much of the money went to warlords and politicians, many with ties to the drug trade and in some cases the Taliban, the New York Times said. U.S. and Afghan officials were quoted as saying the CIA supported the same patronage networks that U.S. diplomats and law enforcement agents struggled to dismantle, leaving the government in the grip of organized crime.

Nahid Fareed, a member of parliament from western Herat province, who usually supports Karzai's government, said the claims in the story represented a "serious issue"."Any hidden money that the palace receives from indirect channels, such as spy agencies, notably the CIA, is against national interest and is treason," Fareed told Reuters. In 2010, Karzai said his office received cash in bags from Iran, but that it was a transparent form of aid that helped cover expenses at the presidential palace. He said at the time that the United States made similar payments. The latest New York Times report said much of the Iranian cash, like the CIA money, went to pay warlords and politicians. For most of Karzai's 11-year reign, there has been little interest in anti-corruption in the army or police. The country's two most powerful institutions receive billions of dollars from donors annually but struggle just to recruit and maintain a force bled by high rates of desertion.; var median = (relatedItemsTotal / 2); var $relatedContentGroupOne = $('.related-content.group-one ul'); var $relatedContentGroupTwo = $('.related-content.group-two ul'); $.each($relatedItems, function(k,v) { if (k + 1 = median) { $relatedContentGroupOne.append($relatedItems[k]); } else { $relatedContentGroupTwo.append($relatedItems[k]); } }); } else { $('.third-article-divide').append($('div class="related-content group-one"h3 class="related-content-title"Also In World News/h3ul/ul/div')); $('.related-content ul').append($relatedItems); } },500); } Next In World News UK's May taps career diplomat to replace EU envoy after scathing resignation LONDON British Prime Minister Theresa May appointed a senior career diplomat as envoy to the European Union on Wednesday to replace an ambassador who quit with a scathing resignation letter that exposed frustration among officials over her strategy. Germany detains Tunisian man linked to Berlin truck attacker BERLIN German police have detained a 26-year-old Tunisian man over links with the perpetrator of an Islamist truck attack on a Berlin Christmas market that killed 12 people, a federal prosecutors' spokeswoman said on Wednesday. More than 2,000 Iraqis a day flee Mosul as military advances NEAR MOSUL/ERBIL, Iraq More than 2,000 Iraqis a day are fleeing Mosul, several hundred more each day than before U.S.-led coalition forces began a new phase of their battle to retake the city from Islamic State, the United Nations said on Wednesday. MORE FROM REUTERS window._taboola = window._taboola || []; _taboola.push({ mode: 'organic-thumbnails-a', container: 'taboola-recirc', placement: 'Below Article Thumbnails - Organic', target_type: 'mix' }); Sponsored Content @media(max-this site) { #mod-bizdev-dianomi{ height: 320px; } } From Around the Web Promoted by Taboola window._taboola = window._taboola || []; _taboola.push( { mode: 'thumbnails-3X2', container: 'taboola-below-article-thumbnails', placement: 'Below Article Thumbnails', target_type: 'mix' } ); window._taboola = window._taboola || []; _taboola.push