IslamicFinance.de

Dana Gas applies Shari’ah non-compliance as a cause for restructuring. Dana Gas has proposed a restructuring to holders of its $700 million of Sukuk maturing in Oct 2017. Its proposal is on the basis that these Sukuk are no longer Shari'ah compliant because standards of interpretation have changed since they were issued in 2013. Dana Gas is seeking to have its existing Sukuk declared invalid in a UAE court and this court has granted Dana Gas an injunction protecting it from claims until the case is decided. If the precedent of revisiting Shari'ah compliance infects the Islamic finance industry, there is greater risk of a loss of confidence in other markets too. There are many examples of distressed conventional bond borrowers engaging in opportunistic negotiating positions. The result was higher cost of borrowing for them rather than for the broad asset class.