COURSE BACKGROUND

Despite restrictive market conditions, Islamic finance continues to provide opportunities for capital raising and direct investment throughout the world. It is also emerging as an increasingly important mechanism for attracting funds from the Middle East to Asia, as demonstrated by recent bi-lateral arrangements agreed between GCC and Asian financial regulators. However, to be involved in this flourishing sector market participants need to understand completely new financing concepts, principles and terminology.

To facilitate this task, Islamic Finance Training brings you a new program: The Islamic Capital Markets & Investment Banking School. In four days we will cover the principles of Islamic finance & investment; Islamic project finance; Sukuk and Islamic capital markets; and risk management and Islamic treasury products. Your expert course director Abdulkader Thomas is a world leader in the development of Islamic financial products and will guide you through this complex but potentially lucrative sector.

The course will start with Islamic finance principles to ensure delegates have a good understanding of the essentials before moving onto more advanced areas such as Sukuk and developing Islamic treasury products. By the end of the course delegates will be equipped to effectively structure Islamic financing solutions for clients.

WHO SHOULD ATTEND

The course has been developed for those with limited exposure to Islamic finance, but will also benefit those with a deeper understanding. In particular:

• Investment bankers & capital markets professionals
• Corporate bankers
• Corporate treasurers and finance managers
• Regulators
• Consultants, lawyers & accountants
• Fund managers
• Islamic financiers

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Day 1: Principles of Islamic Finance & Investment

What are the Principles of Islamic Investment & Finance which define the Shurut (or Conditions) for all Contracts

• Discussion of key principles, fiqh sources
• Principles underlying Islamic contracts
• Understanding riba and gharar as key
  

Understanding Applied Islamic Contracts 1: the Contracts of Sale

• Review of key Islamic banking contracts and practical examples
• Murabahah
  
  • Trade finance example
• Ijarah
  
  • Capital equipment example

Understanding Applied Islamic Contracts 1: the Contracts of Sale

• Review of key Islamic banking contracts and practical examples
• Salam
  
  • Commodity supply example
• Istisna
  • Construction example

Understanding Applied Islamic Contracts 2: the Contracts of Business Organization; how the underlying business examples are turned into investments or deposits:

• Review of key Islamic banking contracts and practical examples
• Musharakah and Mudarabah
  
  • General principles
  • Applied to trade and corporate finance
• Mudarabah and Wakalah
  
  • Synthesizing deposits
  • Syndications
    • Choosing between Wakalah and Mudarabah

Syndication Management

• Wakalah v. Mudarabah
• Fees and roles
• Review of a term sheet structure and Shariah compliance

Understanding the Shariah Process

• What are examples of practical developments in the introduction of a product for Shariah compliance
• How does one maintain that compliance?

Day 2: Sukuk and Financial Products for Islamic Project Finance Transactions

Reminder of the Basic Islamic Rules as Applied to Project Finance

• What is riba?
• What is gharar?
• What are the key rules of contract?
• What is the difference between possession and ownership?

Core Transactions and Sukuk

• Review of basic Islamic structures and their strengths and weaknesses for project finance
• Overview of Sukuk:
  
  • What are they
  • How are they governed
  • How do they apply to project finance

Murabahah and Tawarruq

• How could Murabahah support project finance
• Why Tawarruq is used
  Example of a shipping deal: the VLCC acquisition by Tawarruq

Ijarah Methods

• Understanding Ijarah, Ijarah wa iqtina and forward Ijarah deals
• Pros and cons of Ijarah with project finance
• Example of a shipping deal – the VLCC acquisition
• Example of a construction deal using a forward lease

Salam & Istisna

• Understanding rules of Salam and its derivative Istisna
• Case study of Salam applied in a petrochemical project financing
  Example: Egyptian Fertilizer Company
• Case study of Istisna for power plant and its issues
  Example: SKS Tanjung Power

Musharakah, Mudarabah, & Wakalah

• What is the difference between Musharakah, Mudarabah and Wakalah: some basic rules and concepts
• How Mudarabah has been applied in project acquisitions with high risk
  Example: Aabar Petroleum
• How Musharakah solved a significant cross border project financing
  Example: Al Waha
• The Wakalah – Ijarah alternative
  Example: Red Sea Gateway

Closing Discussion

• Review of securitization options for methods reviewed
• Discussion of global market issues and challenges

Day 3: Sukuk & Islamic Capital Markets

Capital Markets & Securitization

• Types of Sukuk and comparison with conventional bonds and asset backed securities
• Overview about recent issues of Sukuk and the market demand/subscription
• Overview of market growth, demand factors, and absence of secondary markets

Legal, Tax and Infrastructure Concerns for the Islamic Capital Markets

• Offering requirements for placements in the Middle East
• Trust and special purpose vehicle rules, absence thereof
• Regulatory developments and differences from jurisdiction to jurisdiction.
• Structural problems in the different key markets
• Role of the ratings agencies

CASE STUDY: SCECO – Structuring Challenges in Saudi Arabia

• True sale
• Bankruptcy remoteness
• Accounting de-recognition
  
  • US – who has control
  • UK – who has the risks and rewards
• Trust – by contract?

Rating Sukuk

• The questions and approaches taken by the rating agencies
• Examining prior cases to determine the ratings that could be applied

CASE STUDY: Tamweel v. CAGAMAS v. DAAR

• Mortgage backed securitization Sukuk from GCC and Malaysia
• Structure and market acceptance
• Application of risk tiering and variations in reasoning between markets

My Company, My Bank, My Deal Competition

• Interactive Sukuk issuance project and team exercise
• Three unique projects will be presented and teams will be asked to define solutions, market steps and listing outcomes

Day 4: Risk Management, Islamic Treasury Products & Derivatives

Introduction to Islamic Derivative Concepts

• Reminder on sarf, gharar and possession
• Examine the concepts of “hedge fund” vs. “hedging” vs. “arbitrage”
• Discussion of the Long Term Capital Markets problem – why certain concepts cannot be applied
• Key principles of permissible derivatives:
• The Edwardes – Kamali derived analysis
• Short sale issues reviewed
• Option issues reviewed

Key Financial Instruments

• Key risks
  
  • Transaction exposure
  • Translation exposure
  • Economic exposure
  • Interest rate exposure
• Financial risk types or “50 ways to lose your money”
• Risk management terms
• Key financial instruments
  
  • The basic building blocks
    
    • Deposits, forwards, futures, options
• Financial risk management instruments
  
  • Currency management
  • Interest rate management
  • Other risks
• Derivatives for the retail client
  
  • Structured products

Risk Management

• Hedge choice and performance measurement
  
  • Determining the benchmarks
• Overview of legal risk management
• Overview of taxation aspects of derivatives and risk management

Back to the Future: Current Developments and Trends

• Credit and insurance derivatives
• Dangers and disasters; profits and principles
• The financial future

Tawurruq & Islamic Swaps in Derivatives Context

• Compare and contrast to “true” Murabahah and Salam
• Discuss application for both hedging and risk management
• Recent developments in the revitalization of “cash & carry”
• Examine concerns among scholars and market participants
• Analysis of the BNP-Paribas swaps as offered to Perdana

New Directions in the Synthesis of Hedging Solutions and Derivatives in the Islamic Context

• Promises, profile exchanges and the current thought processes
• How Salam, Intifa’a and Arbun are providing hedging opportunities
• Synthetic options that are Shariah compliant?
• Prospective Islamic copycats in the derivatives space

Course Conclusion and Wrap-up

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EXPERT COURSE DIRECTOR

Abdulkader Thomas

President & CEO, SHAPE™ Financial Corp. Arlington, Virginia and Kuwait. Consultants to the US and international financial community in matters relating to Shariah compliant financial structuring; sub-advisor to the global securities industry with respect to Sukuk and other forms of Islamic transactional issuance; and Islamic banking training resource. Present & past clients include University Bank of Ann Arbor, APICORP of Saudi Arabia, FWU Group of Germany, Salam Financial Corp. of Toronto, Siraj Capital, Ltd. of Jeddah, First Investment of Kuwait, Qatar Consulting of Doha, Khazaen Venture Capital of Kuwait, Taj Capital of Toronto, and others.

Abdulkader has over 25 years of diversified financial services experience. A graduate of the Fletcher School of Law & Diplomacy in international trade, Abdulkader earned a BA with honors in Arabic & Islamic Studies from the University of Chicago.

Based in Kuwait, Abdulkader has worked in Bahrain, New York, London, Washington, D.C., and Los Angeles. His areas of activity have included trade finance, real estate finance, securities, and Islamic finance at Citibank, Credit Lyonnais, Sumitomo Bank, Ltd., The United Bank of Kuwait, and MEF Money/Guidance Financial Group.

Abdulkader is responsible for shepherding the first US banking regulatory approvals of Islamic financial instruments for Ijarah wa Iqtina and Murabahah. More recently Abdulkader secured regulatory approval for an Islamic profit sharing deposit to be applied in the US. Abdulkader also structured the first REIT of REITs structured to allow Muslims to invest in listed US REITs whilst complying with Shariah. Abdulkader has also been involved in the structuring of inbound foreign investment for both the US and the UK. Abdulkader has included supervising marketing and consumer demographics in conjunction with new business launches.

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DATES & PRICE

Discounts

• Why not take advantage of our special group booking incentive and train a number of your team members at once?  Send 3 delegates to any one course and receive a fourth place completely free of charge.  Further incentives are also available for higher delegate numbers – please contact us directly for more details.

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