OPPORTUNITIES THROUGH LFX FOR ISLAMIC SECURITIES

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OPPORTUNITIES THROUGH LFX FOR ISLAMIC SECURITIES
by
M. Najib Shaharuddin
26 September 2002 19 Rejab 1423H
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CONTENTS

• State of Islamic Banking Worldwide
• Islamic Financing Contracts
• Types of Islamic Securities
• Why Islamic securities?
• Why LFX?

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STATE OF ISLAMIC BANKING WORLD WIDE

• Liquid Islamic funds USD600 billion
• with Islamic FI USD100 billion (17)
• with conventional FI USD 500 billion (83)
• Islamic funds growing at 15 p.a.

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STATE OF ISLAMIC BANKING WORLD WIDE

• Western banks having Islamic windows
• Deutsche
• HSBC (Amanah Finance)
• Citibank (CIIB)
• ABN Amro
• Commerze Bank
• Klienwort Benson
• UBS (Noriba Bank)

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STATE OF ISLAMIC BANKING WORLD WIDE

• Islamic Financial Institutions approx. 180
• Only 1 in top 100 banks in the world
• - Al Rajhi Banking (ARABIC)
• assets USD11.4 B, rated BBB
• International Islamic Financial Mkt
• (IIFM)
• AAOIFI, Rating Agency

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STATE OF ISLAMIC BANKING WORLD WIDE

• Islamic Mutual Funds
• more than 100 funds
• global portfolios
• broad variety of products
• investment managers majority conventional

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ISLAMIC FINANCING CONTRACTS
Islamic Financing
Equity-based
Debt-based
Mudharabah (Trustee Profit- Sharing)
Musharakah (Joint-venture Profit sharing)
Bai (Deferred Sale) Ijarah (Leasing)
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TYPES OF ISLAMIC SECURITIES

• Contracts Ijarah, Mudharabah, Musharakah
• Security Asset-Backed / Guaranteed
• Margin Floating / Fixed Rate
• Recently concluded
• USD150 M First Global Islamic Lease Sukuk
• USD600 M Malaysian Global Sukook
• Bahrain Govt. Leasing Securities on BSE

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WHY ISLAMIC SECURITIES? -from investors viewpoint

• Shortage of quality globally shariah approved
  assets in major currencies
• Enhance existing Islamic liquidity management
• - diversification
• - tradeability

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WHY ISLAMIC SECURITIES? - from issuers viewpoint

• Opportunity to tap global markets
• - Islamic Conventional Banks
• Non-banks Fund Managers, MNCs HNW
• I.I.F.M facilitates infrastructure
• - Shariah endorsement
• - standardization
• - benchmarking

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FIRST GLOBAL SUKUK INC. USD150 MILLION SERIAL
ISLAMIC LEASE SUKUK

• Contract Ijarah (Leasing)
• Assets land owned by Guthries subsidiaries
• USD50 M 3-year Trust Certificates due 2004
• USD100 M 5-year Trust Certificates due 2006
• Rating BBBis
• Listing LFX
• International Acceptability

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FIRST GLOBAL SUKUK INC. USD150 MILLION SERIAL
ISLAMIC LEASE SUKUK

• Structure complies with Shariah of different
  scholars
• Matching investors issuers requirement
• - Investors
• Quality assets, good returns, shorter tenor,
  acceptable rating, tradeability, floating rate
• - Issuer
• Diversify source competitive cost

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WHY LFX?

• Why Labuan?
• Caters for Islamic instruments
• Complete platform for
• - trading
• clearing settlement
• - custodian
• Real-time trading

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THANK YOU
email najib_at_bankislam.com.my