The Theory and Practice of Profit Sharing Investment
Foundations of Islamic Finance series
Edited by Mohamed Ariff, Munawar Iqbal and Shamsher Mohamad
Chapter 12: Origination, Issuance, Marketing and Listing of Sukuk Securities
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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