Malaysia: Citigroup and Dow Jones Indexes to Launch First Islamic Bond Index
March 17, 2006, Kuala Lumpur – Dow Jones Indexes and Citigroup Corporate and Investment Banking, both leading global index providers, launched the Dow Jones Citigroup Sukuk Index in Kuala Lumpur today, the first index that seeks to measure the performance of global bonds complying with Islamic investment guidelines. The launch was officiated by YBhg Tan Sri Nor Mohamed Yakcop, Finance Minister II.
Similar events will be held in Bahrain on March 19, and in Dubai on March 20 respectively. The index, which will go live on 2 April 2006, was created primarily for use as the benchmark for investors seeking exposure to Shari’ah-compliant fixed-income investments. In addition, the index may serve to increase secondary market trading in this growing asset class and facilitate cross-market relative value trading among different asset classes.
The Dow Jones Citigroup Sukuk Index will include investment-grade, U.S. dollar-denominated Islamic bonds—also known as Sukuk—issued in the global market. At launch, the Index initially will track seven issues: Islamic Development Bank, Solidarity Trust Services Ltd, BMA International Sukuk, Qatar Global Sukuk, Malaysia Global Sukuk, Sarawak Sukuk and Dubai Global Sukuk.
To be included in the Index, an Islamic bond must comply with both Shari’ah law and the Bahrain-based Auditing & Accounting Organization of Islamic Financial Institutions (AAOIFI) standards for tradable Sukuk. Once a bond meets these criteria, Dow Jones Indexes and Citigroup will apply market-based criteria such as minimum maturity of one year, minimum issue size of US$250 million, and an explicit or implicit rating of at least BBB-/Baa3 by leading rating agencies.
“The Dow Jones Citigroup Sukuk Index is a first of its kind – a landmark for the development of the Islamic sukuk market. We are proud that Malaysian issues are included in this index. The fact that 2 out of the 7 issues are Malaysian is a testament to Malaysia’s importance as an Islamic financial centre,” said Sanjeev Nanavati, Country Head of Corporate and Investment Banking, Citigroup Malaysia.
Mohsin Nathani, chief executive officer, Citi Islamic Bank, said: “We are delighted to offer our global index and Sukuk capabilities to the Islamic Banking industry in partnership with Dow Jones Indexes. The launch of the Index is in line with our strategy to offer Islamic issuers and investors world-class and innovative products that contribute to expanding the frontiers of Islamic capital markets. Citigroup is a leader in Islamic Finance and the construction and launch of this index underscores our capabilities and commitment.”
The Dow Jones Citigroup Sukuk Index follows the same consistent, quantitative methodology as the Dow Jones Islamic Market Indexes, which are monitored to ensure their continued compliance with Shari`ah Law. Dow Jones Indexes launched the first Islamic indexes—the Dow Jones Islamic Market Index family—in 1999. Today, the Dow Jones Islamic Market Indexes are used by asset managers in 16 countries for a variety of financial products that screen out activities that are incompatible with Islamic investment guidelines. Excluded from the indexes are stocks of companies in these lines of business: alcohol, tobacco, pork-related products, financial services, defense/weapons, and entertainment. Also excluded are companies that fail any of three financial ratios.
End of day index values of the Dow Jones Citigroup Sukuk Index will be available on www.djindexes.com, via The Yield Bookâ fixed income analytical system (www.yieldbook.com) and via major data vendor services upon the launch of the Index.
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Citigroup (NYSE: C), the leading global financial services company has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Major brand names under Citigroup’s trademark red umbrella include Citibank, CitiFinancial, Primerica, Smith Barney and Banamex. Additional information may be found at www.citigroup.com
Citigroup Corporate and Investment Banking works closely with corporations, financial institutions, institutional investors and governments to enable them to achieve their strategic financial objectives. As an industry leader in global banking, capital markets, and transaction services, with a presence in many countries dating back more than 100 years, Citigroup Corporate and Investment Banking provides clients with cutting-edge ideas, best-in-class products and solutions, and unparalleled access to capital and liquidity.
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Dow Jones Indexes is part of Dow Jones & Company, which publishes the world’s most vital business and financial news and information. Dow Jones Indexes is a premier global provider of investable indexes, including the Dow Jones Averages and the Dow Jones Global, Regional, Country and Sector Titans Indexes and is co-owner of the Pan-European Dow Jones STOXX Indexes. Together with Wilshire Associates, Dow Jones Indexes markets and licenses the Dow Jones Wilshire index family, which includes the Dow Jones Wilshire 5000 and its size, style, and sector indexes. Dow Jones Indexes also offers a number of specialty indexes including hedge fund, commodity and credit derivative indexes.
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