IslamicFinance.de

Persian Gulf issuers are choosing to sell non-Islamic bonds instead of sukuk in the borrowing rush that has followed Dubai World’s debt restructuring.
The abundance of liquidity in the non-Islamic debt market, the enforceability of investors’ rights in defaults and the extra cost associated with Islamic bond documentation are steering issuers away from sukuk, Unicorn Investment Bank BSC’s senior vice president of capital markets said.

Malaysia, the world’s largest market for sukuk, plans to improve its legal system to become an alternative location to the U.K. for resolving international Islamic finance disputes. The goal is to position Malaysian laws as the law of choice for Islamic finance transactions globally. Disputes about Shariah principles are a risk to the market for sukuk, bonds complying with Islam’s ban on payment of interest. Persian Gulf companies have traditionally based cross-border contracts on U.K. law to take advantage of the country’s developed legal system and neutrality, according to Unicorn Investment Bank BSC. The challenge will be to gain acceptance in the Middle East because of different religious interpretations in various jurisdictions. A group of scholars in Kuala Lumpur is helping to set up a committee to prepare the first global certification for Shariah experts said Aznan Hasan, the president of the oversight committee