SINGAPORE'S central bank said on Monday its sukuk, or Islamic bond, issuance facility will be launched next year in a bid to promote the growth of Islamic finance in the city-state.
The Monetary Authority of Singapore said the sukuk structure, based on the sale-and-leaseback of underlying property, will be given the same regulatory treatment as Singapore government securities (SGS) and returns will be tied to the risk-free yield of SGS of equal tenor.
'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,' said the central bank's Managing Director Heng Swee Keat in a statement.
Mr Heng also said a number of financial institutions have expressed interest in the sukuk and that the first issue willtake place early next year.
Islamic finance is derived from the sharia, or Islamic law.
It avoids interest-based financing and advocates ethical investing and a fair distribution of profits and losses between venture partners.
A flood of Middle East petrodollars and rising demand for ethical investments are drawing new players into the Islamic finance sector which is estimated to be worth US$1 trillion (S$1.53 trillion) . -- THOMSON REUTERS
