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Wednesday, 26 November 2008

Singapore Develops Sukuk Issuance Facility To Promote Islamic Finance

SINGAPORE, Nov 24 (Bernama) - Singapore is in the final stages of setting up a sukuk issuance facility to provide Syariah-compliant regulatory assets to financial institutions as part of its efforts to promote the growth of Islamic finance in the city-state.

The Monetary Authority of Singapore (MAS) said that a number of financial institutions had already expressed interest and the first issue was expected to take place at the start of next year.

MAS said this in a release here quoting its Managing Director Heng Swee Keat who was spoke at the 15th World Islamic Banking Conference in Bahrain Monday.

Heng said that the sukuk structure was based broadly on the Al-Ijarah structure or the sale-and-leaseback of an underlying property.

The Singapore's initiative was first announced at the 5th Islamic Financial Services Board Annual Summit held in Jordan last May.

Sukuk issued by the facility would be given equal regulatory treatment as Singapore Government Securities or SGS and returns would be tied to the risk-free yield of SGS of equivalent tenor.

Heng said the facility was open to all financial institutions that plan to or were currently carrying out Syariah-compliant financial services in Singapore.

"We are issuing on a reverse enquiry basis which means we can size and time the issuance according to the needs of the financial institutions," he said.

Eligible and interested financial institutions were invited to approach the monetary authority as it worked towards a formal launch, Heng said.
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