MAS Develops Singapore Dollar Sovereign-rated Sukuks to Promote the Growth of Islamic Finance
Singapore, 24 November 2008...The Monetary Authority of Singapore (MAS) announced today that we are in the final stages of setting up a sukuk issuance facility to provide Shariah-compliant regulatory assets to financial institutions as part of our efforts to promote the growth of Islamic Finance in Singapore. This initiative was first announced at the 5th Islamic Financial Services Board Annual Summit held in Jordan in May 2008.
2 Speaking at the 15th World Islamic Banking Conference in Bahrain today, Heng Swee Keat, Managing Director, MAS said that the sukuk structure is based broadly on the Al-Ijarah structure, or the sale-and-leaseback of an underlying property. Sukuk issued by the facility will be given equal regulatory treatment as Singapore Government Securities, or SGS, and returns will be tied to the risk-free yield of SGS of equivalent tenor. Mr Heng said, "The facility is open to all financial institutions that plan to or are currently carrying out Shariah-compliant financial services in Singapore. 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. A number of financial institutions have already expressed interest and we expect the first issue to take place at the start of next year."
3 MAS invites eligible and interested financial institutions to approach MAS as we work towards a formal launch. We will announce further details in due course.