Sukuk Market Starved of Benchmark Sovereign

March 25, 2010 by · Leave a Comment 

By Carolyn Cohn and Shaheen Pasha

LONDON/DUBAI, March 23 (Reuters) – Sovereign borrowing still eludes the Islamic bond, or sukuk, market, leaving investors hungry for a benchmark issue to reinvigorate trading after the credit crunch and the Dubai World crisis.

Where issuance from euro zone and emerging market borrowers in 2010 has been fast and furious, with emerging market borrowers alone issuing over $50 billion, there have been no sovereign sukuk issues at all.

Only one international sukuk has been issued so far this year, a $450 million Islamic bond for Saudi property developer Dar al-Arkan.

A resolution of debt woes at state-owned Dubai World, the mounting of domestic regulatory hurdles for issuers and improved liquidity could bring sovereigns to the sukuk market from around the third quarter.

But for now borrowers have been deterred by thin trading, the extra premium which borrowers have to pay to attract investors into this relatively small and specialist market, question marks over sovereign guarantees and regulatory conundrums.

“There is genuine need for issuance,” said Muneer Khan, partner and head of Islamic finance at law firm Simmons & Simmons in Dubai.

“Government-related issuances and good credit corporate issuances can often open the gates for further corporates.”

A sukuk is similar to a bond but complies with Islamic law, which prohibits the charging or payment of interest.

The typical path for any debt market is that the initial borrowers are sovereigns, seen as relatively risk-free, followed by state-owned entities, and then by corporate borrowers who will offer a higher yield.

“If sovereigns get deals away at a certain level, corporates should trade 30-40-50 basis points above,” said a London-based Islamic finance specialist.

But without sovereign deals, it is hard for corporates to follow.

The Philippines last week shelved plans for a debut sukuk issue, citing legal hurdles.

Indonesia, which has previously issued in the sukuk market, has no plans to issue again before September.

Gulf borrowers such as Bahrain and Dubai have also previously issued sukuk. But trading is weak after the shock payment standstill on Dubai World debt, which includes Islamic debt, and other defaults in a market once boasting a zero default rate.

In addition, the lack of a government guarantee for some state-owned Dubai World debt came as a shock to many investors.

Sukuk prices are generally trading below par and the market is highly illiquid, market participants say, even as benchmark emerging sovereign debt spreads are trading at their tightest over U.S. Treasuries in nearly two years.

Global sukuk issuance is likely to range between $15-17 billion in 2010, down from $19 billion last year, a recent Reuters poll shows. Currently even those forecasts look ambitious — in 2009, nearly all sukuk issues were made by states and quasi-sovereign entities.

“The sukuk market has been doubly affected by the downturn and the situation in the Middle East, so people are not pushing ahead — it’s not an easy market for a first-time borrower,” said Farmida Bi, partner at law firm Norton Rose in London.

European sovereigns have failed to issue any sukuk at all.

The UK was at the forefront of plans for sukuk issuance, and has the legal framework in place. But its original plans coincided with the outbreak of the global financial crisis, and the country has since saddled itself with huge amounts of debt.

“The reality is that the UK government has to fund a 178 billion pound ($266 billion) deficit,” said the Islamic finance specialist.

“To come to the market with a $500 million to $1.0 billion sukuk is not the highest on their priority list.”

France was also hoping to issue a sukuk but has become bogged down in legal changes, and market participants say sukuk issuance in countries such as Turkey remains some way off.

However, there are a few signs of light.

Investors are awaiting a restructuring any day of $26 billion in Dubai World debt, which will draw a line under the four-month old problem.

“The more positive news that comes for resolutions, the better,” said Khan. “It can’t hinder further issuances, but it could help.”

Sovereigns such as Jordan and Kazakhstan have said they want to issue sukuk for the first time, although there is no set timing.

And as markets around the world recover, led by emerging debt which is seeing strong demand, sukuk could yet attract investors.

According to a Gulf regional banker at a major investment bank: “The sukuk market is a natural follower of the debt capital markets and we’re starting to see more activity there. There is liquidity in the bond market.”

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Did U.S., Israel Provocateur S. Ossetia Conflict?

August 14, 2008 by · Leave a Comment 

Does the Sun Come Up in the Morning?

Courtesy Kurt Nimmo, Infowars

August 9, 2008–Dead civilians in South Ossetia. But you will not hear much about it on CNN or Faux News. Because they are too busy reporting ad nauseam about the extramarital shenanigans of CFR darling John Edwards.

In order to find out what’s really going on in Georgia, you have to read the international press on the internet. Bush, McCain, and Obama may cast blame on Russia, but reading the international press you get a different perspective.

2008-08-09T155205Z_01_OSS16_RTRMDNP_3_GEORGIA-OSSETIA

Chechen special forces soldiers from Vostok (East) army unit sit atop of an APC (armoured personnel carrier) as they move toward the South Ossetian capital of Tskhinvali, at the South Ossetian settlement Dzhava, August 9, 2008.

REUTERS/Denis Sinyakov

Gori    

Soldiers from the Ukraine, the United States, Georgia and Azerbaijan partake in “Peace Shield 2005” on the Crimean peninsula in southern Ukraine.

Russia accuses U.S. of orchestrating conflict

“Russian officials believe that it was the USA that orchestrated the current conflict. The chairman of the State Duma Committee for Security, Vladimir Vasilyev, believes that the current conflict is South Ossetia is very reminiscent to the wars in Iraq and Kosovo,” reports Pravda, the Russian newspaper.

Recall the CIA admitting it “helped to train the Kosovo Liberation Army before Nato’s bombing of Yugoslavia,” according to The Sunday Times. The KLA is a perfect outfit for the CIA. “Known for its extensive links to Albanian and European crime syndicates, the KLA was supported from the outset in the mid-1990s by the CIA and Germany’s intelligence agency, the Bundes Nachrichten Dienst (BND). In the course of the 1999 war, the KLA was supported directly by NATO,” writes Michel Chossudovsky. “The KLA had extensive links to Al Qaeda, which was also involved in military training. Mujahideen mercenaries from a number of countries integrated the ranks of the KLA, which was involved in terrorist activities as well as political assassinations.” Of course, “links to Al Qaeda” translate into links to the CIA.

“The things that were happening in Kosovo, the things that were happening in Iraq – we are now following the same path. The further the situation unfolds, the more the world will understand that Georgia would never be able to do all this without America. South Ossetian defense officials used to make statements about imminent aggression from Georgia, but the latter denied everything, whereas the US Department of State released no comments on the matter. In essence, they have prepared the force, which destroys everything in South Ossetia, attacks civilians and hospitals. They are responsible for this. The world community will learn about it,” Vasilyev told Pravda.

Indeed, the world will learn about it, but not by way of America’s corporate media, more interested in the entirely meaningless baby-making of Clay Aiken and Jaymes Foster. Bread and circuses shall suffice in America.

U.S. loads up Georgia with weapons to fight “al-Qaeda”

The Federation of American Scientists website reveals that Georgia is the most recent recipient of U.S. weapons and aid, receiving 10 UH-1H Huey helicopters (four for spare parts only) and $64 million in military aid and training to fight Arab soldiers with alleged ties to Al Qaeda that have been participating in the Chechen war and are now taking refuge in the Pankisi Gorge region in northern Georgia. Like many of the recent aid recipients, claims that Georgia has become an al Qaeda sanctuary are dubious at best.

“The rapid increase in US strategic influence in the Caucasus has alarmed Russian policy planners. Moscow is keen to take steps to shore up its eroding position in the region. However, Russian officials have limited options with which to counter US moves while at the same time maintaining cordial relations with Washington,” Eurasia.net reported on April 8, 2002. “The most prominent US moves in the Caucasus are the decision to dispatch military advisers to Georgia and a March 29 State Department announcement on the lifting of an arms embargo imposed on Armenia and Azerbaijan. Both actions have the potential to tilt the military establishments of all three Caucasus nations away from Russia and towards NATO.”

Imagine Canada decided to enter a military and diplomatic alliance with Russia and Canada began arming itself to the teeth with Russian weapons and training with Russian military advisers. Can you guess what the reaction of Bush and the neocons would be?

It doesn’t take much imagination.

Rose revolution

The Rose Revolution was not a simple uprising but was aided by the CIA and Ambassador Richard Miles

CIA engineered Georgia’s Rose Revolution

Of course, this al-Qaeda presence is not so dubious when one considers the well documented fact the supposed Islamic terror group is a CIA contrivance. As well, this absurd concern for al-Qaeda’s presence under Georgian beds helped make possible Georgia’s so-called Rose Revolution. “The Rose Revolution was not a simple uprising but was aided by the CIA and Ambassador Richard Miles (think Serbia). From early 2002 onwards the CIA had been operating in Georgia, supposedly to combat Al Qaeda,” explains researcher James Schneider.

It appears the CIA has worked behind the scenes for quite a while in Georgia. Back in 1993, for instance, CIA agent Fred Woodruff was assassinated by unknown assailants outside of Tbilisi. “Spokesmen for the State Department and the C.I.A. declined to confirm that Mr. Woodruff was working for the intelligence agency. But high-ranking Administration officials said he was, adding that he was not spying on Georgian officials but was training Mr. [Eduard] Shevardnadze’s security forces,” the New York Times reported at the time. So tight was the CIA with the former president of Georgia, they engineered the “bloodless” Rose Revolution and pitched him out on his ear.

In the wake of Georgia’s much vaunted — by the U.S. corporate media — “revolution,” the installed government of autocrat Mikheil Saakashvilli wasted little time imposing “democracy” neocon-style, resulting in violent suppression of opposition political rallies. “Georgia was rocked by opposition rallies for six days last November as protesters occupied central Tbilisi demanding Saakashvili’s resignation over allegations of corruption and increasing authoritarianism,” reported RIA Novosti. “The Georgian leader responded by sending in riot police to crack down on protesters on November 7. Over 500 people were injured according to Human Rights Watch as police used rubber bullets, tear gas and water cannons to break up the demonstrations.” In addition, Saakashvilli’s goons used “non-lethal” weapons of the sort developed by the Pentagon (see video).

U.S. military holds “exercises” in Georgia immediately prior to conflict

Last month, Aljazeera reported that “a total of around 1,650 soldiers form the US, Georgia and several other East European countries, have begun exercises on the formerly Russian-controlled Vaziani base, the Georgian defense ministry said.”

NowPublic reported on July 17:

US officials insist the long-planned wargames have nothing to do with the recent dispute between Russia and Georgia over the breakaway Georgian regions of Abkhazia and South Ossetia. But they give Washington a chance to support pro-west Tbilisi at a critical time.

If you believe this, I have a bridge for sale.

In fact, these “long-planned wargames” were so important the State Department packed up and shipped off Condi Rice to Georgia. Her arrival was nicely timed to coincide with “a deadly firefight between Georgian troops and separatists in a Russian-backed breakaway region…. Ahead of Rice’s arrival, a senior State Department official who did not want to be identified told reporters that unchecked conflict in the region could lead to catastrophe. The official also said Moscow should realize its Soviet empire is gone.”

Catastrophe, indeed, although Russia’s response to Georgia’s invasion of South Ossetia demonstrated Russia’s resolve to reclaim its supposedly evaporated empire.

Israel gets in on the act

Let’s not forget America’s junior partner in chaos and mass murder, Israel. “In addition to the spy drones, Israel has also been supplying Georgia with infantry weapons and electronics for artillery systems, and has helped upgrade Soviet-designed Su-25 ground attack jets assembled in Georgia, according to Koba Liklikadze, an independent military expert based in Tbilisi. Former Israeli generals also serve as advisers to the Georgian military,” reports the International Herald Tribune.

No wonder the horrific photos emerging from South Ossetia have that Lebanon invasion look about them. Israel has over fifty years of experience in invading small countries and has consistently specialized in murdering and tormenting civilians.

Blind eyes all around

As Lavrov explains it, the “Georgian administration has found the use to its arms, which they have been purchasing during the recent several years… We have repeatedly warned that the international community should not turn a blind eye on massive purchases of offensive arms, in which the Georgian administration has been involved during the recent two years.”

Unfortunately, the international community will likely “turn a blind eye” to the U.S. and Israel arming, training, and obviously orchestrating the current conflict, same as they by and large turned a blind eye to Israel’s criminal invasion of Lebanon back in 2005 and the U.S. invasion and ongoing occupation of Iraq. In regard to the latter, the “international community” — indeed, the whole of the American people — are so disorganized and demoralized they cannot address the simple fact the neocons lied a nation into war. Nixon was bounced for far less.

It looks like Russia will be obliged to deal with Georgia’s treachery on its own. Regrettably, Russia’s response will entail even more murder of innocents and wholesale destruction, as this is how government historically deals with threats – real, imagined, or provocateured.

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