Islamic bonds: then there was light

Islamic bonds: then there was light

It’s no fun being a bond investor these days. You either invest in safe havens like US and German bonds and get a negative return, or go on adventure in countries like Spain and can’t be sure you’ll get your money back.

So the emergence of Shariah compliant sukuk offers an appealing middle way. With the London 2012 Sukuk Summit being held on June 6 and 7, beyondbrics reviews the latest developments in the market.

First to catch the eye is a steady rise in sukuk indices in the last few months. The Dow Jones Sukuk Index, for example, which measures the total return on US dollar denominated Islamic bonds, ended higher in May for the sixth time in as many months. Since 2009, the index has performed twice as well as the Barclays Capital Bond Composite Global Index, a benchmark for bonds.

The amount of sukuk outstanding is at an all-time high. In the first quarter of this year, $40bn was added to the pile, an increase of 48 per cent in new issuance compared with the same period last year.

Islamic bonds: then there was light


Demand is strong for both corporate and sovereign sukuk, according to Tariq Al-Rifai, Dow Jones’ director of Islamic market indexes. A recent $4bn issuance by the Kingdom of Saudi Arabia was three times oversubscribed. A $1.75bn issue from the Saudi Electricity Company, the largest corporate sukuk of 2012, was ten times oversubscribed.

What explains this surge in popularity?

Since it was first re-introduced in Malaysia in the early 90s, the Shariah compliant bond type has enjoyed a steady rise in popularity in the Islamic world, both for issuers and for buyers. In the six years since its inception, the HSBC/Nasdaq Dubai US Dollar Sukuk Index has returned on average more than 5 per cent a year, notwithstanding the severe debt crisis in Dubai in 2009 which destroyed the value of many sukuks.

Until recently, the market was dominated by Malaysia. Now, a small sukuk renaissance is taking place in the Middle East. First banks and then companies in the Gulf region have started embracing sukuk issuance, explaining a large chunk of the increase in supply. Saudi Arabia is leading the way.

According to Nick Stadtmiller, head of fixed income research at the Emirates NBD bank, the roots for this remarkable sukuk awakening lie in the financial crisis in the developed world.

“About this time last year, a lot of Gulf-based issuers couldn’t get their traditional bonds sold because the markets in Europe were drying up,” he says.

This led some key institutions to rethink their attitude towards sukuk issuance. Before, the strict rules on sukuk made many of them conclude the game wasn’t worth the candle. Unlike bonds, sukuk have to be based on underlying assets, and they must be approved by Shariah scholars.

But the exceptional market circumstances made some issuers think again. Last year, conventional Arab banks like the First Gulf Bank and the Abu Dhabi Islamic Bank began issuing sukuk with success.

The same became true for some major Arab companies this year, such as Saudi Electricity ($1.75bn), the Saudi General Authority of Civil Aviation ($4bn) and recently the shopping mall operator Majid Al Futtaim ($400m).

The result is that sukuk supply is slowly catching up with demand, which had been increasing at the speed of sound in recent years – or better, at the speed of oil pumped out of Islamic soil.

For Stadtmiller, the fact that sukuk are now used as a replacement for a corporate loans means the market is at a “watershed moment”.

“I think we’ll see a lot more of these corporate sukuk in the future, many with a longer duration,” he says. (Sukuk can run for up to 10 years, whereas bank loans are often restricted to two or three years.)

There is no reason why the sukuk’s rise should stop at the borders of the Islamic world.

“There is also a strong appetite for sukuk among corporates in developed markets, such as GE Capital,” says Al-Rifai at Dow Jones. “If more western companies look to issue sukuk, they are bound to find a lot of interest from investors.”

That’s indeed very likely, as recent oversubscriptions suggest. Many wealthy investors in the Middle East can buy only sukuk as they want to comply with the Islamic ban on receiving interest. Western investors, from their side, don’t mind buying sukuk either. As sukuk are asset-based and many Islamic funds hold them to maturity, they are seen as a relatively safe investment.

But those looks can nevertheless be deceiving. Among all the optimism, you could almost forget that sukuk is a whole class of assets, not a homogenous product like US Treasuries.

Whether the issuers chose sukuk or regular bonds, their own creditworthiness is in the end what makes the difference. Investors who bought Dubai issued sukuk before 2009 will know what that means.

But in these uncertain times, sukuk remain highly valued among investors. With an average yield of 3.8 per cent, it is not hard to see why. Chances are the Sukuk Summit that started on Wednesday in London will only solidify that reputation.


QIIB mulling sale of its Islamic bank in Britain

IBB confirmed it had received an approach by QIIB, which currently owns a controlling 88.41% stake, to take over the remaining shares with a view to a possible sale as it considers the strategic future of the UK bank.

Masraf Al Rayan, the biggest Islamic bank in Qatar, had said on Monday that it had begun negotiations to acquire a 70% stake in IBB, with the remaining 30% stake to be bought by the Qatar government.

“QIIB has also indicated that it has begun initial, non-binding discussions with certain potential third party purchasers, which include Masraf Al Rayan; there has been no approach by Masraf to IBB,” IBB said in a statement.

QIIB mulling sale of its Islamic bank in Britain

Founded in 2004, IBB was the first standalone Islamic retail bank in the UK with a high street presence with five branches and around 50,000 customers, offering financial services that adhere to Islamic principles such as a ban on interest.

IBB’s founding shareholder QIIB took full control of the bank in 2011, in a deal valued at the time at around 25mn pounds ($38.65mn), as part of a plan to develop an international banking business compliant with sharia laws.
But the Shariah lender has struggled to turn a profit since inception, reporting a full-year loss of £8.9mn in 2011.

Speaking to Reuters in April, Sultan Choudhury, managing director at Islamic Bank of Britain, said he was confident the bank could gain traction and become profitable within the next three years.
QIIB has until July 5 to make an offer under UK financial regulations. IBB said it will make a further announcement on the matter in due course. No details of the size of the possible deal were disclosed.
The UK is the largest Islamic finance centre in Europe, accounting for $19bn of $1.7tn in global assets and is home to five fully sharia-compliant banks, data from the UK Islamic Finance Secretariat (UKIFS) estimates.

The close ties between the Gulf countries and the UK has led to a flurry of activity aimed at capitalising on the two-way traffic.

Britain’s largest standalone Shariah bank, Bank of London and the Middle East (BLME), is awaiting regulatory approval to start operations in the Gulf this year, whilst Abu Dhabi Islamic Bank, the second-largest Islamic lender in the United Arab Emirates, opened its first branch in London in May.


Johor Corp’s Sukuk Orders Said to Exceed Supply Three Times


Malaysia’s state-owned investment company, sold 3 billion ringgit ($948 million) of Islamic bonds that drew bids for more than three times the amount on offer, two people familiar with the matter said.
Johor Corp’s Sukuk Orders Said to Exceed Supply Three Times  It issued five-, seven- and 10-year notes at yields of 25-29 basis points over the government’s non-Shariah-compliant securities, said the people, who declined to be named as the information is private. The sale attracted 11 billion ringgit in orders, they said.

The offering is the first government-guaranteed Islamic bond this year and comes ahead of state-owned Danainfra Sdn.’s plan to sell 8 billion ringgit of similar notes later this month to fund the construction of a mass railway in Kuala Lumpur. Sukuk issuance by Malaysian companies rose 8 percent in 2012 to 15 billion ringgit from the same period last year, when sales reached a record 75.6 billion ringgit, according to data compiled by Bloomberg.

“For a 3 billion ringgit issue, the take-up is healthy and signals there’s still demand for low-risk bonds,” Michael Chang, who oversees $1 billion as head of fixed income at Kuala Lumpur-based MCIS Zurich Insurance Bhd., said in an interview today. “The spread against Malaysian government bonds is fairly decent considering prevailing market conditions.”

Johor Corp.’s vice-president of corporate services, said in an e-mail today that he would reply to Bloomberg questions later in the day.

Palm Oil Assets     

The 400 million ringgit portion due in 2017 was priced at 25 basis points more than similar-maturity government securities, the people said. The 800 million ringgit of seven-year debt was sold at a 28 basis-point premium, while the 1.8 billion ringgit of bonds maturing in 2022 were priced to yield 29 basis points more than government counterparts.

The underlying assets for Johor Corp.’s sukuk, or notes that pay returns to comply with Islam’s ban on interest, will be palm oil contracts and company shares, Kamaruzzaman Abu Kassim, the president and chief executive officer, told reporters on April 12.



Dubai’s Noor Islamic Bank Seeks Business In Singapore, Malaysia

Noor Islamic Bank, a lender controlled by Dubai’s government, said it’s seeking business in Singapore and Malaysia as it aims to benefit from growth in Southeast Asia.

Dubai’s Noor Islamic Bank Seeks Business In Singapore, Malaysia

“I’ll be interested in any transaction that comes up,”Hussain Al Qemzi”, chief executive officer of the United Arab Emirates-based lender, said in an interview in Singapore today. “Malaysia is the world’s biggest sukuk market. I understand companies are looking to finance infrastructure projects.”

Malaysia, which is aiming to become a global hub for Islamic finance, has a $444 billion program to build roads and power plants over the next 10 years. Sukuk, or Islamic bonds, pay asset returns to comply with the religion’s ban on interest.

Al Qemzi said yesterday at the World Islamic Banking Conference in Singapore that the European debt crisis offered Islamic lenders a “golden opportunity” to capture a bigger share of the world banking market.

Noor Islamic helped clients raise $2.1 billion of syndicated loans in Turkey in the past 18 months and it plans similar ventures in Southeast Asia, he said.

“We will be interested in helping Southeast Asian clients with Shariah-compliant business in the Middle,” Al Qemzi said.

Malaysian companies have sold 15 billion ringgit ($4.7 billion) of Islamic bonds in 2012, 8 percent more than the same period last year, according to data compiled by Bloomberg. Assets of Shariah-compliant banks are expected to reach $1.1 trillion this year from $826 billion in 2010, according to an estimate published by Ernst & Young.


Barwa Bank offering three-year, capital protected Islamic notes

Barwa Bank offering three-year, capital protected Islamic notes

Barwa Bank is offering a “unique” Shariah-compliant three-year capital protected notes linked to the Turkey and Indonesia equity markets until June 21.

“The Turkey Indonesia Equity Capital Protected Note is an investment opportunity for investors seeking potentially higher returns with 100% capital protection.

The growth is based on the performance of a selected basket of stocks in two high growth emerging markets- Indonesia and Turkey.

The investor will receive at maturity, 100% of his/her initial investment plus an indicative 80% of the positive performance (semi-annual average) of the underlying basket of stocks,” Barwa Bank said.
The minimum investment required is $25,000. The Turkey Indonesia Equity Capital Protected Notes are issued by Morgan Stanley

The note is a fixed term investment, so the investor should be prepared to hold their investment for the full three year term.

The offer may close earlier (than June 21) if oversubscribed, the bank said.

Applications for the capital protected notes can be obtained at any Barwa Bank branch in the country.
Barwa Bank head (private banking) Aicha Meddah said: “This is a great opportunity to invest in the growth of two rapidly growing markets – Turkey and Indonesia, while receiving 100% capital protection over the next three years, a continuing priority for many investors.

“A key advantage compared to other capital protected products is the volatility controlled strategy and the provision for periodic re-balancing.”

Barwa Bank head (Retail) Hussain al-Abdullah said, “The Turkey Indonesia note reflects Barwa Bank’s strategy of providing customer driven wealth management solutions.

“Together with this investment opportunity and other initiatives, we are presenting wide a range of banking and investment products that meet our customers’ financial needs in accordance with Shariah.”


Noor Islamic Bank launches structured investment products

Noor Islamic Bank has launched two structured wealth management investment products, which offer clients an exposure to a diverse range of asset classes while minimising their risk through one structured deposit. The new products allow clients to invest in precious metals, currencies, equities, energy and agricultural commodities, with 100 per cent capital protection.

Noor Islamic Bank launches structured investment products

Hussain AlQemzi, Chief Executive Officer, Noor Investment Group and Chief Executive Officer, Noor Islamic Bank said, “We do not recognise that clients need to compromise on their investments because they want it to be Shari’ah-compliant. These two products fill a gap in the Shari’ah-compliant investment space and provide clients the opportunity to benefit from the upside of investment cycles.”

The Hybrid Pick and Drop Structure is designed for conservative to moderate risk clients, who want exposure to diverse range of opportunities without risk to capital. Features of the product include:

  • 100% capital protected three-year investment
  • Investment in diversified asset classes
  • Best performing asset class is picked and dropped from further calculations every six months.

John Chang, Head of Retail Banking at Noor said, “The Hybrid Pick and Drop Structure is the perfect way for clients to invest in financial markets and participate in their growth, while having the security of 100 per cent capital protection. This unique product is a good tool for allowing clients to take advantage of investment cycles and opportunities. It demonstrates our ability to provide exceptional value to investors.”

The GCC Volatility Cap structure has been designed to appeal to both moderate and aggressive investment risk clients. It offers:

  • GCC market access without downside risk
  • A diversified portfolio of underlying stocks across different markets and sectors

Chang said, “This product is unique in the way that it tracks the volatility of the underlying equities basket. If the set benchmark is breached the exposure to equities is trimmed and moved to Murabaha equivalent investments. This is a very innovative way for our clients to invest in equities, with the added benefit of 100 per cent capital protection.”


Discussion on how to raise debt capital via Sukuk markets, taking place at Oman Islamic Banking and Finance Conference 2012

Sukuk or Islamic bonds enable organisations to raise capital in a Shariah compliant manner. The demand for sukuk was previously limited outside the GCC until few years ago and the year 2012 sees Oman as an emerging potential sukuk market among Thailand and the CIS countries. Since the concept of “Sukuk” is a fairly new phenomenon in Oman, Mr. Hussain Al-Yafai, Director, Debt Capital Markets MENA, Standard Chartered Bank, will provide us an in-depth view on raising debt capital via Sukuk markets, at the Oman Islamic Banking and Finance Conference 2012 taking place from 5th-6th June 2012 at the Grand Hyatt.

Discussion on how to raise debt capital via Sukuk markets, taking place at Oman Islamic Banking and Finance Conference 2012

Sukuk differs from conventional bonds (debt-based instruments that pay interest), as they are asset based and represent ownership by Sukuk holders in the underlying assets, allowing them to share income from the same. Sukuk issuances enable companies to tap a new source of funding thereby allowing them to diversify from traditional capital markets funding. The primary advantages of a Sukuk issuance to a conventional issuance are access to a wider base of investors which taps Islamic liquidity and a lower cost of funding. From an international viewpoint, some of the challenges faced by the industry include the lack of liquidity in the secondary market, differing views amongst Sharia’h scholars on acceptability of certain Sukuk structures and differences in legal, tax and regulatory frameworks across various jurisdictions.

The benefits and challenges of Sukuk will be covered by Mr. Al Yafai in greater detail at the Conference among other key topics, including the facilitation of the sukuk market by Omani Authorities, international and regional trends in the issuance of Sukuk, differences between Sukuk and conventional bonds from a credit point of view, possibility of more conventional issuers tapping Islamic Liquidity etc.

Mr. Al-Yafai’s role at Debt Capital Markets MENA, Standard Chartered Bank includes originating and executing a number of high profile transactions in the region which includes structured debt financing (i.e.- Sukuks, ABS, equity linked, structured and subordinated debt). His mandate entails the complete process, from deal origination to final execution including pricing, structuring, distribution, documentation, credit ratings, listing and public offer. He has successfully led and has been a part of the team that arranged landmark transactions such as the Govt. of Ras Al Khaimah’s AED 1 billion & USD 400m Sukuk, USD 500m Sukuk, First Gulf Bank’s USD 650m and USD 500m Sukuk, Emirates Islamic Bank’s USD 500m Sukuk, Tamweel’s USD 300m Sukuk and ADCB’s USD 500m Sukuk.


Understanding banking customers better with Mr. Hamza at the Oman Islamic Banking and Finance Conference 2012

“The Customer is King” is an expression often used and never disregarded. However while the power of the customer is not underestimated, lesser attention is paid to his care and understanding, two elements important in fostering long-term relationships with customers. These two elements apply to fields all over the world, but more importantly to sectors offering services to niche audiences.

Mr. Jamsheed Hamza, Chief Executive Officer, Blue Ocean, will throw light on the same, with relation to Islamic Banking at the Oman Islamic Banking and Finance Conference 2012 taking place from 5th- 6th June 2012 at the Grand Hyatt.

As the CEO of Blue Ocean Academy, Mr. Hamza brings to his role, a wealth of experience in customer service, process reengineering and corporate relations, having worked for some of the leading organisations in the Middle East. Prior to joining Blue Ocean, he held the post of the Head of Corporate Banking, Islamic Banking Division at the National Bank of Abu Dhabi (NBAD), where he was entrusted with improving customer service quality while also creating an ideal working environment for staff. During his career he has gained valuable experience in spearheading organisational change, problem solving and crisis management, and identifying and understanding key business drivers.

Understanding banking customers better with Mr. Hamza at the Oman Islamic Banking and Finance Conference 2012

In light of the global crisis, Islamic Banking is gaining prominence with many customers switching to more risk-averse banking approaches. In addition to Mr. Hamza enlightening attendees on the role of customer care and understanding in the successful implementation of Islamic banking at the Conference, the presentation will also list out common customer complaints faced in an Islamic banking system and solutions for addressing those concerns.

Islamic Banking based on the Islamic Law or Sharia’h offers a variety of options involving different regulations and customer requirements, which calls for banks to formulate greater understanding of their customer’s needs and demands in order to ensure profitable banking services. Islamic Banking provides its varied customer segments with different product, service and brand criteria. Based on perception, customers will interpret acceptable levels of Sharia’h compliance differently. For e.g. traditional customers may be willing to pay premium for most Sharia’h compliant products but other customers may be prefer products that are less rigidly Sharia’h compliant and have more competitive rates, factors banks need to keep in mind while designing Sharia’h compliant product concepts, features, benefits, services etc. Since customer requirements are dependent upon factors like age, lifestyle, education and others, offering Sharia’h compliant products which cater to different customer segments can be in the bank’s favour.

Always keen to pass on his experience, Mr. Hamza regularly addresses seminars and conferences for organisations across the world. This has included addressing the UOP, Teens Summits, EEG and the International Islamic Banking Seminar. He has also worked as a trainer and consultant for international names namely the Worldwide Fund for Nature, Sony Middle East and Children’s Film Society. His presence at the Oman Islamic Banking and Finance Conference 2012 will help attendees walk in the shoes of an Islamic banking customer and help interested related parties develop Sharia’h compliant products, keeping the interests of their customers in mind.



Sukuk in Africa inevitable more than anywhere else

High demand by investors could overcome the high cost of selling sukuk

African states more than ever need to fund growth plans, construction, refinance and spur investment. While reasons to tap the Islamic finance market vary from one state to another, the main ones are:

1. Many of these countries are predominantly inhabited by Muslims and it only makes sense to go for Islamic finance – in fact, they are a bit late in catching up with that global trend.

2. Islamic finance is a global trend and increasingly governments are becoming aware of the fact that one efficient way to attract the Muslim pool of wealth – concentrated in the Middle East oil-rich states, is by providing Shariah-compliant investments.

3. Raising funds through sukuk is a means of diversifying funding sources and hedge against global financial crisis and the attached volatility, shocks and risks, something traditionally conventional debt sellers and equity investment fans are becoming increasingly aware of.

Successful Models

Sudan’s financial sector is based solely on Shariah principles. All banks in Sudan are Shariah-compliant and all bonds issued in Sudan are in fact sukuk. The Sudanese market witnessed a one-time corporate sukuk in 2007 by Berber Cement Company worth USD  130 million. However, the fact that the whole Sudanese financial services sector is Islamic is not enough to take it as an example. We need to see how other financial systems which are traditionally conventionally run borrowers are going to integrate Islamic finance or at least establish a mix of conventional and Islamic finance.

Gambia has a successful record of sukuk issuance. In 2008, the Central Bank of Gambia started selling short-term Salam Sukuk. Since then, almost every week, the central bank sells three-month sukuk – beside its conventional debt. Zawya Sukuk Monitor estimates at least USD 95 million has been raise to date via 167 sukuk.

North Africa

Following the Arab Spring that Egypt witnessed in 2011 – and even prior to that – Islamists started calling for more Islamic financing in a country that is one of the largest Muslim nations on the planet.  In June 2011, the Egyptian Financial Supervisory Authority issued primary approval on proposed amendments to the Executive Regulation of Capital Market Law No. 95 of 1992 regarding the rules governing issuing and trading sukuk.

In February 2012, EFSA presented a draft to amend the regulation. Egypt is said to be planning to sell USD 2 billion of sukuk to Egyptians abroad and the National Bank of Egypt will be in charge of issuing the bonds.

Similarly, ruled by the Islamists following last year’s revolution, Tunisia is reported to be seeking to raise funds via sukuk. In November 2011, Islamist party Ennahda said it will promote greater options in Islamic finance in the country.

Morocco’s central bank last year said it is in talks with the country’s banking industry group GPBM on regulations that would allow sukuk issuance.

In Algeria, the chairman of the MSP’s parliamentary group, Mohamed Said Boubekeur, called in April 2011 for traditional banks to open counters dedicated to Islamic banking.

Libya’s central bank is reported to be preparing a law to allow lenders and issuers to sell sukuk after the fall of Muammar Qaddafi.


West, East and South Africa

Nigeria, West Africa’s largest economy, has repeatedly expressed its interest in selling sukuk. In 2011, the central bank had given an implicit approval to Jaiz Bank, the country’s first Islamic bank.

Delays in sukuk issuance include Senegal, which has announced a deadline to meet investors and sell sukuk in both the domestic and international markets. Yet, to date, it has not sold any sukuk.

Similarly, in Kenya – the largest economy in East Africa – legislation to eliminate tax barriers to sukuk issuance was discussed last year but never materialized. According to Kenya’s central bank, including sukuk is likely to increase the amount of cash flowing into Kenya from the Gulf region. The Capital Markets Authority of Kenya has recommended continuous allocation of a sukuk component in future bond issues targeting Islamic institutions and retail investors. Now there is serious talk about a USD 500 million sukuk by June 2012.

Interestingly, South Africa, where Muslims are estimated to constitute only 1.5% of the population, seems to be the most serious of all. In December 2011, the National Treasury invited banking institutions to submit proposals for the provision of advisory services for the structuring and issuance of a government sukuk in the local and international markets.

Shortlisted bidders were supposed to be informed by January 20, 2012. To date, we have not heard of any development. Does this mean South Africa will stand in line like the other African candidates? The situation is more of “let’s wait and see”.

African Sukuk Pipeline

Egypt Sovereign Sukuk

Tunisia Sovereign Sukuk

Senegal Sovereign Sukuk

South Africa Sovereign Sukuk

Nigeria Sovereign Sukuk

Al Baraka Egypt Bank Sukuk

Kenya Sovereign Sukuk

Source: Zawya, Sukuk Monitor

Factors to Watch

As we see progress in terms of regulatory changes as well as the initiatives and measures taken toward issuing sukuk, a few questions arise. First of all, how fast will the African states move; how serious are they about issuing sukuk? Countries such as France, the United Kingdom, Japan and Korea have been considering issuing sukuk for years now, but the attempts were hindered by opposition and criticism. We expect such opposition and criticism to be almost zero in Africa. However, political risk and uncertainty could play a vital role in a historically and traditionally unstable continent.

Another factor to watch is the recent talk about sukuk being expensive; at least more expensive than conventional bonds. Will African states find it expensive to sell sukuk? Or will the high demand from both domestic investors and international investors make up for high issuance costs, hence making it more affordable?

Finally, are we going to see more of the Gambian and Sudanese models (domestic sukuk), or are we going to see international sovereign sukuk? So far, Senegal, Egypt and South Africa are talking international. Are we going to see sovereign sukuk only or is it a matter of time before African companies start selling sukuk as well.

Zawya’s  Sukuk Pipeline lists only sovereign sukuk from Africa, as no companies have revealed plans to sell sukuk yet – except for one shelved by Al Baraka Egypt. However, corporates typically rush to sell sukuk as soon as a sovereign bond is sold and the benchmark is set.Sukuk is an inevitable choice, apparently more so in Africa than anywhere else. The governments’ efforts on this front will be crucial.

BLME Signs Islamic Banking Deal With Global Marine for Wind

Bank of London and The Middle East Plc, the London-based Islamic bank, signed a 14 million-pound ($22 million) deal to help Global Marine Systems Ltd. buy a vessel to install subsea power cables at offshore wind farms.

The leasing transaction with the Essex, England-based marine technology and engineering company is the Shariah- compliant bank’s first in the renewable energy industry, according to a statement from the bank.

The deal “allows us to contribute indirectly to the U.K.’s attempts to diversify its sources of energy,” Jervis Rhodes, head of corporate banking at BLME, said in the statement sent by e-mail yesterday.

Nations from the U.K. to Germany are installing wind turbines offshore to curb fossil-fuel emissions and meet targets for renewable power. The U.K. plans to reach 18 gigawatts of capacity from offshore wind parks by 2020 while Germany is targeting 10 gigawatts by then. Parks will be built further from shore in deeper waters as developers seek to industrialize the technology to bring down costs.

The barge, called Cable Enterprise, will install subsea power links that help transport power generated by the turbines for use by consumers. As an Islamic bank, the transactions and contracts BLME undertakes are Shariah compliant, or follow principles of Islamic law.