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.

Qatar Real Estate in $275mn Islamic financing deal

by Lin Noueihed
Qatar National Bank's Islamic branch and Qatar International Islamic Bank signed on Tuesday a 1 billion riyal ($275 million) Islamic financing deal with Qatar Real Estate Investment Co.
They said in a statement the funds would go to future Qatar Real Estate developments in the Gulf Arab country, which is the world's biggest exporter of liquefied natural gas, estimated to be worth 2.5 billion riyals.

The announcement of the Islamic financing or ijara deal comes at a time when real estate developers in the nearby United Arab Emirates scale back major projects as the global financial crisis freezes credit lines and hits demand.
Some analysts have said that Islamic financing could receive a boost as conventional credit markets suffer, because Islam bans interest and favours revenue derived from underlying physical assets.

QNB Al Islami will contribute 700 million riyals and Qatar International Islamic 300 million in the deal which comes into effect in January.

QNB Al Islami was previously mandated to lead arrange an Islamic finance deal worth 1.37 billion riyals for Qatar Real Estate, which was Qatar's first corporate sukuk and used to fund property projects in Qatar.

Qatar Real Estate said in February it planned to borrow funds by the third quarter, possibly by selling Islamic bonds, to finance up to 3 billion riyals of projects.

The government of Qatar owns 27 percent of Qatar Real Estate. (Reuters)