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Sunday, 30 September 2007

Kuwait Finance House to establish US$357 million Sukouk company

KUWAIT. The Kuwait Finance House (KFH), Kuwait's leading Islamic banking operator, announced an initiative to set up a KWD100 million (US$357 million) company aimed at the development of financial investment instruments in accordance with the Islamic Sharia, especially Sukouk, the Islamic financial tool. KFH Director General Mohammad Sulaiman al Omar said in a press release that the initiative would paves the way for the establishment of a market for the dealing of Sukouk issued by world Islamic financial institutions. The move would strengthen the role of KFH, or Baitak, as a market maker by helping issuance, buying and sale of Sukouk, a tool widely needed in the Islamic finance industry, said the top banker, noting that there is no room for Sukouk holders (companies and individuals) to liquidate and obtain quick cash dividend through a market with a fair assessment. The total world Sukouk value amounted to US$24.5 billion, and Baitak's share was valued at US$4 billion, during the first half of 2007, a 75% increase over the previous year, al Omar said. Al Omar anticipated that a US$16 billion worth of Sokouk would be placed in the market by the end of the year. Gulf Cooperation Council (GCC) financial institutions have issued a total US$6.3 billion worth of company Sukouk during the first half of 2007 compared to US$9 billion worth of Sukouk in 2006, he said, anticipating that unpaid value of sovereign and company international Sukouk volume would hit US$70 billion in mid 2008 and US$225 billion by the year 2010. The average Sukouk dealing at present stands at US$100-200 million a month, with Malaysia representing 36% of the issued Sukouk and 30% for the GCC countries, he said. Al Omar added that the volume of projects to be funded in the Gulf region alone either by the private sector or government during the next ten years amounts to US$800 billion. He said that Sukouk may be the most important instrument of financing that can contribute to providing liquidity for these projects and thus contribute to development efforts in the Gulf states. The Kuwait Finance House was established in the State of Kuwait in 1977, as the first bank operating in accordance with the Islamic Sharia. KFH is listed in the Kuwait Stock Exchange , with a market capitalization of KWD3.133 billion as of 31 December 2006. -(BIME, 28 Sep 07)

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