U.K. sells $339 million in Islamic bonds
The U.K. raised $339 million from Islamic bonds, with investors bidding for more than 10 times the amount offered as the nation became the first non-Muslim sovereign issuer of the debt.
Prime Minister David Cameron announced the plan to sell securities that comply with Islam's ban on interest on Oct. 29. The sukuk will help London establish itself as a global capital for Islamic finance alongside Dubai, United Arab Emirates, and Kuala Lumpur, Malaysia, Cameron said in a speech at the time. The industry is growing 17 percent a year and may be valued at $2.67 trillion by 2017, according to PricewaterhouseCoopers LLP.
"We have seen very strong demand," George Osborne, chancellor of the Exchequer, said in a Treasury statement. "I hope that the success of this government issuance will encourage further private sector issuances of sukuk in the U.K."
Central banks and sovereign wealth funds, as well as domestic and international financial institutions, received allocations of the issue that will settle next Wednesday and be listed on the London Stock Exchange, according to the Treasury. Rental payments on property will provide income for investors, it said.
A "significant challenge" to the sukuk issue was the limited number of suitable government assets to back it, according to Robert Stheeman, chief executive officer at the U.K. Debt Management Office. Such assets need to be unencumbered and directly owned by the central government, he said.
"This wasn't about trying to generate as much money as possible, it was about trying to send a very strong signal about the U.K.'s commitment to Islamic finance," Stheeman said at a Euromoney conference in London on Wednesday.
-- Bloomberg News
In India, weak monsoon hampers sowing
NEW DELHI -- The weakest start to India's monsoon season in at least five years is delaying planting of crops including rice, soybeans and lentils, threatening to push up food prices in Asia's third-largest economy.
Rainfall is 38 percent below a 50-year average since June 1, the least since 2009, according to the latest estimate on the website of the India Meteorological Department. The monsoon, stalled over India's western and central regions since June 15, may not progress farther before the beginning of July, B.P. Yadav, head of the National Weather Forecasting Centre, said by phone from New Delhi on Wednesday.
With more than 80 percent of India getting limited rain, delayed sowing may lead to a decline in crop areas and yield, hampering efforts by Prime Minister Narendra Modi to revive growth from near a decade low. An estimated 833 million people out of the 1.2 billion population depend on agriculture for their livelihood, and the sector accounts for 14 percent of the nation's gross domestic product.
"If July rain turns out to be the way it has behaved in June, then there will be issues" for crops, Devendra Pant, chief economist at India Ratings & Research Pvt., Fitch's local unit, said by phone from New Delhi on Wednesday. "June and July are the two months which are very critical for sowing."
The monsoon is the main source of irrigation for India's 263 million farmers, because about 55 percent of cropland is rain dependent.
-- Bloomberg News
Puerto Rico proposes debt restructuring
Puerto Rico Gov. Alejandro Garcia Padilla has proposed legislation that would let certain public corporations restructure debt.
The measure excludes changes to general-obligation bonds and debt backed by sales-tax revenue, according to an emailed statement. Public utilities such as the Puerto Rico Electric Power Authority and the Puerto Rico Aqueduct and Sewer Authority would be able to negotiate with bondholders to change their debt loads. The commonwealth and its agencies have $73 billion of debt.
"The Recovery Act is created to provide a clear legislative framework that allows public corporations to address their financial difficulties without compromising any essential services provided by these corporations," David Chafey, president of the Government Development Bank, said in the statement.
Investors have been anticipating a potential debt restructuring since August, with the island's economy struggling to grow for eight years and an unemployment rate of 13.8 percent that's more than double the U.S. average. Puerto Rico's challenges affect the $3.7 trillion municipal-bond market, because about 66 percent of U.S. mutual funds that focus on state and local debt hold the securities, according to Morningstar Inc.
-- Bloomberg News
N.M. residents offer land to draw Tesla
ALBUQUERQUE, N.M. -- Several New Mexico residents have pledged to donate their land if it will help lure electric-car company Tesla to the state.
KOAT-TV reported Wednesday that some residents are offering land in metro Albuquerque for a Tesla battery plant.
Businessman John Edward said he is willing to give up to 400 acres of his land to reward entrepreneurs such as Tesla.
New Mexico Economic Development Secretary Jon Barela said multiple offers of donated land have come from all over the state.
New Mexico is one of several states that Tesla is considering for the plant, including California, Texas, Arizona and Nevada.
Other states have been wooing the company with incentives and looser environmental restrictions.
-- The Associated Press
McClendon gets stake in pipeline project
Aubrey McClendon, the U.S. shale wildcatter who's raised $10 billion in capital since getting fired from Chesapeake Energy Corp. last year, has acquired a stake in an Oklahoma pipeline project.
An affiliate of McClendon's American Energy Partners LP contributed natural-gas lines in exchange for a minority interest in Tall Oak Midstream LLC's planned 250-mile pipeline and processing network, Oklahoma City-based Tall Oak said in a Business Wire statement Wednesday.
McClendon's company also dedicated 1 million acres of drilling prospects in six Oklahoma counties to the new network, according to the statement. American Energy, also based in Oklahoma City, has an option to increase its stake to as much as 50 percent. McClendon announced plans on June 18 to expand his growing shale empire into the pipeline business, with backing from buyout firm The Energy & Minerals Group.
-- Bloomberg News
Business on 06/26/2014