After a long regulations problems and slow work of head offices, Japanese institutions finally going for Islamic financing. Most of this activity will be focused on Kuala Lumpur which makes this news very good for Malaysia. Right after this as the mandated lead arranger for Nomura Holdings Inc. appointed Kuwait finance House, for its first $100 million Sukuk Al-Ijara.
Plans do not stop there and according to sources from banks in Malaysia, they would issue in Japan the first yen-denominated Sharia compliant paper. This paper won’t be usual Sukuk because of Japanase regulations and tax related laws but it will be a resemblance of Islamic bond type structure. Nomura successfully closed $70 million worth murabaha facility investment which was arranged and lead by a subsidiary of the Araba Banking Corporation, ABC Islamic Bank. Original target was $50 million but due to demand for such short term investements, it was increased.
Nomura is focused to increase Japanese position in the Islamic finance even they were not totally absent from the financial sector. In the past some number of Japanese companies made some influence in that sector using primarily London banks. Even Nomura itself funded Al-Tawfeek Investment Company Japanese Equity Fund.
During the last 20 years Japanese government has been focused on studying Islamic finance and therefore researched financial sector. Islamic banking seminars have been organized in Tokyo by Financial Services Board last few years. In 2007 JBIC announced plans about issuing debut Sukuk in Malaysian ringgit which was meant to help fund activities of JBIC in Malaysia. Lead arrangers for JBIC were Citigroup and CIMB and their task was to attract new investors from GCC markets and Asia. This issuance was cancelled because of differences between Citigroup and CIMB.
JBIC was very irritated by slow reactions of Japanese government which slowing down their efforts. Japan has a very complex government system and to initiate changes is possible only through the prime minister to introduce Sukuk or any other Islamic finance product. Bank of Japan and Japanese Ministry of Finance began cooperation and that resulted in changes related to provisions for foreign subsidiaries of financial institutions that are based in Japan. That allowed to Islamic finance sector to issue Sukuk in local currency and start investment funds.
The Nomura Sukuk is the first big step that opened door for Islamic finance and that is why it is listed on Bursa Malaysia and became the second foreign listing and the first sukuk listing by the Japanase and Asian entity. This way Bura Malaysia is becoming preferred Sukuk listing destination which made Malaysia get on very high position internationally as an Islamic financial hub. All this showing power of Nomura as a brand and also Nomura’s reputation in whole region. Nomura’s lunched Sukuk in Malaysia as their strategy to spread funding by product and also geographically.
The financial ties between the Middle East and far east will be strengthened by the Murabaha facility as the first Islamic funding in the region lead by a Japanese corporation. Murabaha facility will be used for general liquidity management and in the syndication were included Ahli United Bank, ABC Islamic Bank, Samba Financial Group, Islamic Development Bank and Sumitomo Mitsui Banking Corporation Europe Limited.
