This year's rush by top-rated non-Muslim countries to tap the burgeoning Islamic finance market may not be repeated next year but a new crop of sovereign entrants, mostly from emerging markets, is waiting around the corner. The United Kingdom, Hong Kong and Luxembourg - all ranked at least AA by rating agencies - issued sharia-compliant financial instruments, or sukuk, for the first time in 2014. They gave a huge boost to a market which was once just seen as a funding tool for borrowers from the Gulf and Muslim countries in southeast Asia.
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Islamic fKazakhstan eyes ‘unified’ Islamic banking law next yearinance seeks new frontiers9/30/2014 Kazakhstan will start drafting a new Islamic banking law that could help the industry develop in the former Soviet state, after a five-year-old set of rules failed to stimulate activity. Fresh legislation would allow Islamic finance to develop better under the secular regulatory regime of the predominantly Muslim country, said Yerlan Baidaulet, the Kazakhstan member of the board of executive directors at the Saudi Arabia-based Islamic Development Bank. The state-owned Development Bank of Kazakhstan said on Friday it plans to issue Islamic bonds worth up to $500 million in a long-awaited debut issue to establish a sukuk benchmark for the former Soviet republic. The first issue within the programme will comprise between $200 million and $300 million worth of Islamic bonds with a term of no less than five years, the bank said in a statement. It gave no details about when the issue would take place. Kazakhstan is considering selling its first foreign-currency bonds in more than a decade next year to help cover the budget deficit and pave the way for its first sovereign Islamic debt. The central Asian nation “is not excluding the sale of as much as $1 billion of Eurobonds next year,” Deputy Finance Minister Ruslan Dalenov said in an Oct. 26 interview in the capital, Astana. “As the sukuk market is quite narrow, it’s more reasonable to sell Eurobonds first,” which will become a benchmark, and then the Islamic bonds, he said. Kazakhstan took a step closer to launching a $500mn-plus debut sovereign sukuk issue after the lower house of parliament passed amendments to the country’s Islamic finance laws, the finance minister has said. Bolat Zhamishev told Reuters the government would consider the size and timing of the issue after the Senate clears the regulation on Islamic financing, a process that he expects to be complete within a month. Kazakhstan has no immediate plans to issue new licences to conventional foreign banks but may approve a second Islamic bank this year, the country's deputy prime minister said on Sunday. "The second Islamic bank could be opened this year," Aset Issekeshev told Reuters in Abu Dhabi. He declined to give details. "After the crisis, it is not a simple issue. A stable banking system is important for us," he said. Islamic bond offerings may accelerate in the next 18 months, led by first-time issuers in Asia after the region accounted for most sukuk sold this year, Standard & Poor’s said. While issuance of securities that comply with Shariah law are down 17 percent globally this year, Asian borrowers issued $5.3 billion, about 68 percent of the total $7.8 billion worldwide, according to data compiled by Bloomberg. Sales from companies in the Persian Gulf dropped 24 percent to $2.5 billion so far in 2010, the lowest level since 2005, after Dubai World, one of the United Arab Emirates three main state-owned business groups, announced plans to restructure debt in November. Islamic fund managers and investors in the Middle East should turn their attention to more than 65 million Muslims in Russia and the Commonwealth of Independent States (CIS) while the region's banks investigate the potential of offering Shariah-compliant products for overseas investors and local consumers, said a senior official of Amanie Islamic Finance consultancy.
Mark Smyth, Executive Director at Dubai-based Amanie Islamic Finance Consultancy and Education (AIFCE), highlighted the huge potential in Russia as well as the other CIS countries such as Kazakhstan. |