The Islamic Debt Market for Sukuk Securities

The Islamic Debt Market for Sukuk Securities

The Theory and Practice of Profit Sharing Investment

Foundations of Islamic Finance series

Edited by Mohamed Ariff, Munawar Iqbal and Shamsher Mohamad

The relatively new sukuk (or Islamic debt securities) markets have grown to more than US $800 billion over the past decade, and continue to grow at a rate of around 20-30 per cent per year. Arguably the first of its kind, this path-breaking book provides a highly unique reference tool relating to key issues surrounding sukuk markets, which are found in 12 major financial centres, including Kuala Lumpur, London and Zurich.

Chapter 10: Sukuk Industry Development in the Bahrain Capital Market

Sat Paul Parashar

Subjects: economics and finance, financial economics and regulation, islamic economics and finance, money and banking


Sat Paul Parashar 10.1 INTRODUCTION This chapter provides an overview of sukuk industry development in Bahrain. The industry in Bahrain is quite small compared to global markets. It is quite small even compared with the Bahrain banking industry and capital markets. Indeed, the Bahrain debt market itself is quite small, given its recent development and also given its size, though potential is there in the long run as a financial centre. Interestingly, sukuk constitutes the lion’s share of the Bahrain debt market. The number one issue facing Bahrain’s sukuk industry, and for that matter the Bahrain debt market, is absence of market liquidity. The Central Bank of Bahrain (CBB), the Liquidity Management Center (LMC), and the International Islamic Finance Market (IIFM) are actively focused on this and other issues. As noted in an earlier chapter, in recent years Bahrain has rapidly become a global leader in Islamic finance, playing host to the largest concentration of Islamic financial institutions in the Middle East. Bahrain also plays host to a number of organizations central to the development of Islamic finance. These are the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI); the Liquidity Management Centre (LMC); the International Islamic Financial Market (IIFM), and the Islamic International Rating Agency (IIRA). The Islamic banking assets have rapidly increased to constitute about 11 per cent of the total banking assets in 2010 compared to 1.8 per cent in 2000. While the issue size of listed bonds and sukuk constituted about 1.4 per cent of...

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