News / Economy

Britain Aims to be First Western Country to Issue Sovereign Islamic Bond

British Prime Minister David Cameron addresses delegates at the 9th World Islamic Economic Forum in London on Oct. 29, 2013.
British Prime Minister David Cameron addresses delegates at the 9th World Islamic Economic Forum in London on Oct. 29, 2013.
Prime Minister David Cameron made a bid to position London as a leading hub for Islamic finance on Tuesday, announcing plans for Britain to become the first Western country to issue a sovereign sukuk, or Islamic bond.
The planned 200 million pound ($323 million) issue, expected next year, would be much smaller than an originally planned sukuk but would provide a much-needed liquidity management tool for Britain's six Islamic lenders and could encourage local firms to consider issuing sukuk of their own.
Britain's push to promote itself as a leading Islamic finance hub comes as competition heats up with other financial centers in Asia, led by Malaysia, and in the Middle East.
Britain first announced plans for a sovereign sukuk five years ago but that issue never materialized as the country's Debt Management Office decided the structure was too expensive.
The new proposal is less than a fifth of the size of the original and is designed to boost London's status rather than to diversify Britain's investor base.
“Our ambition is clear: to make Britain the first sovereign to issue an Islamic bond outside the Islamic world,” British finance minister George Osborne wrote in a column in the Financial Times on Tuesday.
Sukuk are investment certificates which follow religious principles such as a ban on interest and gambling.
The global Islamic banking industry is expected to tip $1.8 trillion by the end of this year, according to consultancy Ernst & Young, and is starting to attract interest among big Western banks because of rapid growth of trade involving wealthy Gulf economies.
Malaysia, the world's largest marketplace for sukuk, is shifting efforts from local market development towards attracting global issuers, while Dubai is revising regulations to attract sukuk issuance and trading.
London, the European base for several Middle East banks, has the legislation in place to capture more business and has attracted more than $34 billion in sukuk listings from around the globe over the last five years. Sizeable issuance from local firms, however, has remained elusive.
The government sukuk, by enhancing London's status as an Islamic finance hub, should not stumble on the Debt Management Office's “value for taxpayer” objective, a test which the original plan of five years ago failed.
“The government was previously looking at a relatively large program of sukuk issuance as part of its regular financing program, but has now changed its strategy to look at a more modest sukuk issue in order to derive wider benefits such as instigating activity in the Islamic finance industry,” a Debt Management Office spokesman said.
A smaller issue was also more likely to be cost effective, he added.
Islamic Index
The investment-grade sukuk would be welcome news for local lenders which could use it as a liquidity instrument, said Richard Williams, finance director at Bank of London and the Middle East, the UK's largest standalone Islamic bank.
“This challenge will now be resolved and is one of the final measures in creating a truly level playing field for the UK Islamic banks,” said Williams.
The London Stock Exchange also announced plans to launch an Islamic index which would identify companies which are filtered according to Islamic principles, which work in much the same way as socially responsible screens.
Islamic investments have already been used to finance London landmarks such as the Shard skyscraper and the Olympic Village.
The World Islamic Economic Forum is hosting its ninth annual conference in London this week, the first time it has been held in a non-Muslim country.

You May Like

Isolation, Despair Weigh on Refugees in Remote German Camp

Refugees resettled near village of Holzdorf deep in German forestland say there is limited interaction with public, mutual feelings of distrust

Britons Divided Over Bombing IS

Surveys show Europeans generally support more military action against Islamic State militants, but sizable opposition exists in Britain

Russia Blacklists Soros Foundations as 'Undesirable'

Russian officials add Soros groups to a list of foreign and international organizations banned from giving grants to Russian partners

This forum has been closed.
Comment Sorting
by: Xaaji Dhagax from: Somalia
October 30, 2013 2:42 AM
Hello and welcome long-awaited prosperity based on Islamic economic principals, good bye antiquated dysfunctional Capitalism.
Mr. Cameron, what is dinner tonight?

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
With HIV, Can We Get to Zero?i
Carol Pearson
November 29, 2015 1:23 PM
The theme of this year's World AIDS Day is "Getting to Zero." The U.N. says new HIV infections have been reduced by 35 percent since 2000 and AIDS-related deaths are down by 42 percent since the peak in 2004. VOA's Carol Pearson takes a look at what it might take to actually have an AIDS-free generation.

Video With HIV, Can We Get to Zero?

The theme of this year's World AIDS Day is "Getting to Zero." The U.N. says new HIV infections have been reduced by 35 percent since 2000 and AIDS-related deaths are down by 42 percent since the peak in 2004. VOA's Carol Pearson takes a look at what it might take to actually have an AIDS-free generation.

Video Political Motives Seen Behind Cancelled Cambodian Water Festival

For the fourth time in the five years since more than 350 people were killed in a stampede at Cambodia’s annual water festival, authorities canceled the event this year. Officials blamed environmental reasons as the cause, but many see it as fallout from rising political tensions with a fresh wave of ruling party intimidation against the opposition. David Boyle reports from Phnom Penh.

Video African Circus Gives At-Risk Youth a 2nd Chance

Ethiopia hosted the first African Circus Arts Festival this past weekend with performers from seven different African countries. Most of the performers are youngsters coming form challenging backgrounds who say the circus gave them a second chance.

Video US Lawmakers Brace for End-of-Year Battles

U.S. lawmakers are returning to Washington for Congress’ final working weeks of the year. And, as VOA's Michael Bowman reports, a full slate of legislative business awaits them, from keeping the federal government open to resolving a battle with the White House over the admittance of Syrian refugees.

Video Taiwan Looks for Role in South China Sea Dispute

The Taiwanese government is one of several that claims territory in the hotly contested South China Sea, but Taipei has long been sidelined in the dispute, overshadowed by China. Now, as the Philippines challenges Beijing’s claims in an international court at The Hague, Taipei is looking to publicly assert its claims. VOA’s Bill Ide has more from Beijing.

Video After Terrorist Attacks, Support for Refugees Fades

The terrorists who killed and injured almost 500 people around Paris this month are mostly French or Belgian nationals. But at least two apparently took advantage of Europe’s migrant crisis to sneak into the region. The discovery has hardened views about legitimate refugees, including those fleeing the same extremist violence that hit the French capital. Lisa Bryant has this report for VOA from the Paris suburb of Cergy-Pontoise

Video Syrian Refugees in US Express Concern for Those Left Behind

Syrian immigrants in the United States are concerned about the negative tide of public opinion and the politicians who want to block a U.S. plan to accept 10,000 Syrian refugees. Zlatica Hoke reports many Americans are fighting to dispel suspicions linking refugees to terrorists.

Video Thais Send Security Concerns Down the River

As Thailand takes in the annual Loy Krathong festival, many ponder the country’s future and security. Steve Sandford reports from Chiang Mai.

Video Islamic State Unfazed by Losses in Iraq, Syria

Progress in the U.S.-led effort to beat Islamic State on its home turf in Iraq and Syria has led some to speculate the terror group may be growing desperate. But counterterror officials say that is not the case, and warn the recent spate of terror attacks is merely part of the group’s evolution. VOA National Security correspondent Jeff Seldin has more.

Video Belgium-Germany Border Remains Porous, Even As Manhunt For Paris Attacker Continues

One of the suspected gunmen in the Nov. 13 Paris attacks, Salah Abdeslam, evaded law enforcement, made his way to Belgium, and is now believed to have fled to Germany. VOA correspondent Ayesha Tanzeem makes the journey across the border from Belgium into Germany to see how porous the borders really are.

Video US, Cambodian Navies Pair Up in Gulf of Thailand

The U.S. Navy has deployed one of its newest and most advanced ships to Cambodia to conduct joint training drills in the Gulf of Thailand. Riding hull-to-hull with Cambodian ships, the seamen of the USS Fort Worth are executing joint-training drills that will help build relations in Southeast Asia. David Boyle reports for VOA from Preah Sihanouk province.

Video Uncertain Future for Syrian Refugee Resettlement in Illinois

For the trickle of Syrian refugees finding new homes in the Midwest city of Chicago, the call to end resettlement in many U.S. states is adding another dimension to their long journey fleeing war. Organizations working to help them integrate say the backlash since the Paris attacks is both harming and helping their efforts to provide refugees sanctuary. VOA's Kane Farabaugh reports.

VOA Blogs

World Currencies


Rates may not be current.