IslamicFinance.de

Kazakhstan's parliament has approved legislative amendments to facilitate Islamic finance, paving the way for Central Asia's largest economy to issue its first sovereign sukuk next year, a government official said.
The amendments, which still require the president's signature, would also allow for the conversion of conventional banks into Islamic ones, said Yerlan Baidaulet, an adviser to the Investments and Development Ministry.

«We expect the sovereign sukuk in early spring of next year. Probably in March, it depends on the decision of the Ministry of Finance as it has its own budgetary process», Baidaulet said on the sidelines of an industry conference in Kuwait. The legal amendments to the banking services and securities laws are the latest steps by the majority Muslim state to help develop Islamic finance. A dedicated Islamic banking law is also currently in preparation, Baidaulet said. Lawmakers have also passed a law to establish an offshore centre in the capital Astana, which is partly aimed at attracting Islamic finance business, he added.

Development Bank of Kazakhstan has lately decided to swap their 240 million-ringgit sukuk (five-year murabaha Islamic note) to U.S. dollars. The Astana-based bank already sold debt denominated in the Malaysian currency in July of this year, in order to prepare the dollar swap that comes due in August 2017.

The Development Bank of Kazakhstan issued the first sukuk in the former Soviet Union worth $75 million. It is expexted that this sukuk will soon be followed by a number of new issues in the country. The issued bond will generates an annual payment of 5.5 per cent and is a part of the bank's Islamic note programme worth 1.5 billion ringgit. THe programme is subjected to the sharia principle of murabaha.

For the first time, the Development Bank of Kazakhstan has launched an Islamic bond. This issue may result in setting a benchmark for Kazakh sukuk and lay the path for future placement of corporate Islamic bonds. The paper is worth MYR240m ($76.6m) and has benn placed for five years with a yield of 5.5% a year. 38% of the bond are placed in Kazakhstan while the remaining 62% belong to Malaysian investors.

Malaysian trustee company Amanah Raya Berhad is joining forces with Fattah Finance and the state-owned Development Bank of Kazakhstan to conduct a feasibility study to establish the second Islamic bank in the CIS country. Their purpose is to submit an application for an Islamic-banking license later this year under new legislation introduced by Kazakhstan in 2009 to facilitate the establishment of Islamic banks and the introduction of Islamic financial products in the country.