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Tuesday, 6 November 2007

Bank planning to sell $1bn Islamic bond

DOHA BANK plans to sell a $1bn bond in September next year to finance investments in renewable energy, the chief executive officer said yesterday. Islamic bonds, known as sukuk, comply with Islam’s ban on lending on interest. Bondholders are instead paid returns derived from underlying assets, such as rent from real estate. “We’re looking to raise up to $1bn through an Islamic bond in September next year for renewable energy,” Doha Bank’s chief executive R Seetharaman said on the sidelines of an Islamic finance conference in Qatar. The bank wanted the money for projects such as setting up an exchange for trading greenhouse gas emissions permits, Seetharaman said. He gave no further details. The market for carbon credits in the Middle East is nascent, but worldwide is growing rapidly. The global carbon credit market traded volumes of over $30bn last year, up from less than $1bn in 2004. The rapid expansion has caught the attention of a growing number of international investment banks. The region has a large carbon footprint — Qatar emitted the highest greenhouse gas emissions per capita in 2003, according to a UN Development Programme report issued last year. The second annual World Islamic Infrastructure Finance Conference (WIIFC), which bring together investors, project developers and conventional as well as Islamic financial institutions, began at the Four Seasons yesterday.The two-day event will take up key issues including sources of finance for large-scale infrastructure projects, innovation in Islamic finance, defining new parameters for Shariah-compliant project financing and the role of sukuk as well as risk management and insurance. – Reuters

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