Monday, January 19, 2009

Singapore plans S$200 mln Islamic bond programme

SINGAPORE, Jan 19 - Singapore's central bank announced on Monday a S$200 million Islamic bond programme, or sukuk, to promote the growth of Islamic finance in the city-state.

"This sukuk is the sharia-compliant equivalent of Singapore government securities, and is of the highest credit standing," Heng Swee Keat, managing director of the Monetary Authority of Singapore , said at a briefing.

Islamic finance is derived from the sharia, or Islamic law. It avoids interest-based financing and advocates ethical investing and a fair distribution of profits and losses between venture partners.

The bond programme is Al-Ijarah structured, which means the bond is backed by the sale and lease-back of real estate assets. The underlying asset for this bond programme is the office units of MAS's head office.

Singapore is trying to promote the growth of Islamic finance to tap Middle East petrodollars and rising demand for ethical investing.

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