Citi confident of maintaining lead in Islamic finance underwriting

KUALA LUMPUR: Citi, the rebranded Citigoup, is confident of maintaining its global market leadership in the underwriting of Islamic finance owing, among others, to its global distribution platform and the ability to structure quality deals.  

Chief executive officer for global Islamic banking Usman Ahmed said the bank also clinched the position as lead arranger and book runner for Islamic transactions from the adoption of successful models, extensive coverage for such transactions and deep knowledge of Islamic finance markets. 

Usman Ahmed

Of the 20 players in the Islamic bank and capital market transactions compiled by Bloomberg to date, Citi ranked as the top underwriter for Islamic bonds (sukuk) and loans, with about 13% market share, covering 15 deals totalling close to US$4.5bil. 

For Islamic loans alone, the bank had a higher market share of 19%, with 10 deals in hand with volume of about US$4bil. 

“We have the ability to leverage on our extensive distribution platform for the marketing of Islamic transactions to investors. Citi currently is the largest global fixed income institutional underwriter stretching from the United States, Europe, Middle East, and Asia. 

“By leveraging on our global platform and expertise, we are able to give issuers the best structuring solutions and the most efficient execution of their transactions,” Usman said in an interview. 

He said apart from merely doing Islamic syndication and sukuk transactions, Citi’s highly experienced team of Islamic finance experts also worked closely with their conventional banking colleagues to develop syariah-compliant structured investment products. 

These experts, he said, also collaborated with other teams worldwide to structure investments that complied with syariah principles and were marketable from a commercial and credit perspective. 

He said Malaysia was the largest Islamic capital market in the world and currently, of the total US$39bil in sukuks issued globally, about 50% comprised ringgit transactions. 

Usman said going forward, he expected strong potential from Middle Eastern investors for Malaysian Islamic financial issues. He said Citi was talking to a few Malaysian issuers on Islamic transactions and hoped to seal one in a few weeks. 

In June, Citi acted as lead arranger for the RM2.9bil sukuk for Telekom Malaysia Bhd. It was the first exchange offer of one form of highly structured securities for another form of structured securities and the first Islamic preferred share to be issued by a publicly listed company in Malaysia. 

In the same month, the bank acted as lead manager and joint book runner for the RM1.8bil sukuk Al-Ijara offering for SilTerra, in one of the largest transactions in the Islamic ringgit bond market. 

In the Middle East, Citi in July acted as joint lead manager and book runner to the highly successful US$1.5bil sukuk of Dubai Ports World, the first ever 10-year 144a sukuk and the first to be sold side by side with a conventional tranche. 

Other Citi initiatives to strengthen its foothold in the Islamic finance market included expanding into new markets like North Africa, and other Asian and Eastern European countries, apart from rolling out innovative products, Usman said. 

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