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 12: Origination, Issuance, Marketing and Listing of Sukuk Securities

Mohamed Ariff and Shamsher Mohamed

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


Mohamed Ariff and Shamsher Mohamad1 12.1 INTRODUCTION The first Malaysian sukuk as a new Islamic financial debt security was issued as a private sector issue by Shell Company (M) Bhd, and raised RM125 million (US$45 million) in 1990. However, sukuk had been introduced earlier in Saudi Arabia and Pakistan back in the 1980s, but the debut of the 1990 issue was after the institutional development of the market for sukuk in several locations in the Middle East and Southeast Asia, and which is now in major financial centres such as in London and Zurich. In 2010 we witnessed very large markets that structure sukuk under proper regulations, established Shari’ah Boards and certification by properly established regulatory authorities, in the case of trade securities, making it possible to trade this new type of debt in secondary  markets in a number of locations. The sukuk securities markets have grown rapidly, with both public issues and private sector issues, and have been a very popular fund raising mode in Malaysia since 2000. Hence, this Islamic funding instrument is providing finance to both private and public sector investments, and is increasingly becoming a popular means of raising capital to be repaid over a defined period. The market has grown very rapidly and has a predicted growth of about 15–20 per cent per annum for some years to come. Sukuk securities are found in some twelve so-called Islamic bond markets in twelve legal jurisdictions stretching from the Philippines to London. However, there are...

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