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Wednesday, December 17, 2008

Noble Group raises $80 mln 2-year Islamic Financing

Singapore-listed Hong Kong commodities firm Noble Group (NOBG.SI: Quote, Profile, Research, Stock Buzz) said on Tuesday it will borrow $80 million via an Islamic financing facility to refinance existing debt and for general working capital. HSBC Amanah is the sole arranger and book runner for the two-year committed syndicated commodity Murabahah.

Conventional debt financing is ruled out in Islamic banking because of the prohibition of interest. Asset-backed debt financing can be designed, however, on the basis of sale (murabahah) or leasing (ijara) contracts that provide fixed income alternatives to conventional debt financing. The capital provider must have ownership of the asset, however (even if briefly), and bear the risk that comes with that ownership. Recently, cash financing (tawarruq) has also been introduced by reversing the concept of murabahah.

Murabahah is Purchase and resale. Instead of lending out money, the capital provider purchases the desired commodity (for which the loan would have been taken out) from a third party and resells it at a predetermined higher price to the capital user. By paying this higher price over instalments, the capital user has effectively obtained credit without paying interest.

The business started from basic industrial raw materials and soon expanded into chartering, energy and agriculture. Today, Noble is among the world’s largest companies in the business. Here is a snapshot of the first 20 years.
As a global supply chain manager, Noble Group manages the flow of raw materials from source to destination with a uniquely hands-on approach. But being hands-on is about more than being in control. It's about close collaboration with our business associates. It's about being on the ground where it matters most. And it’s about the deep knowledge and understanding we have of our customers, their needs, and their markets. To us, hands-on is not a slogan; it's our way of doing business.

HSBC Amanah is the global Islamic banking division of the HSBC Group, and was established in 1998 with the aim of making HSBC the leading provider of Islamic banking worldwide. With more than a hundred professionals serving the Middle East, Asia Pacific, Europe and the Americas, HSBC Amanah represents the largest Islamic banking team of any international bank.

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