Malta mulling Sukuk issue – Banker Middle East

Malta could be reviving the prospect of issuing a sovereign Sukuk – the asset-backed, tradable bond that is structured in accordance with Shariah law.

A Sukuk offers a proportionate beneficial ownership in the underlying asset, a concept underscored by Islamic values and still one of the fastest growing forms of banking in the world.

Writing in CPI Financial’s blog, managing editor Robin Amlôt said Prime Minister Joseph Muscat had told him that Malta was considering issuing a small Sukuk “to see what the reaction of the markets would be and to give a political message that this is the sort of instrument we are in favour of.”

Amlôt said Muscat suggested that “an announcement could come with a few weeks”.

Malta already has an appropriately rigid and sound framework in place that requires no new law to accommodate a Sukuk issuance.

With most of its government debt funded domestically, through bonds issued on the local market, this would be a small foray into the international market.

“Sukuk issuance would send a very strong signal southwards to the countries along the North African littoral,” Amlôt writes, surmising that a small issuance of €200 million could be in the offing.

“I see no reason why it should not be successfully received in the market. There is a shortage of investible Islamic instruments and it could easily attract investors from the GCC and elsewhere to buy in. However, such an issue, if successful, would be far more important in underlining Malta as a financial services centre for countries in Africa looking to tap international markets in a Shari’ah-compliant manner.”

The Malta Financial Services Authority issued a consultation document in mid-2008 for stakeholders and banks on Islamic finance. Since then, various political commitments were made, including by Lawrence Gonzi and George Abela, on trade missions to the Gulf.