Islamic Finance: an overview

Islamic Finance: an overview

Islamic Finance: an overview

Islamic Finance: news

 

One of the latest news concerning to the Islamic finance world, is related to the Dubai Islamic Bank which announced its $750 million sukuk issuance maturing in June 2020 carries a profit rate of 2.921% and saw a strong oversubscription.
The bank held a road show in London, Singapore and Kuala Lumpur for the issuance which is part of its $2.5 billion sukuk programme. The order book was driven by strong demand across the globe, and given the fact that it was oversubscribed nearly three times, the issuance received more than 85 orders amounting to nearly $2 billion on the back of strong demand from a diverse investor base. The instrument will carry a dual listing on the Irish Stock Exchange and Nasdaq Dubai.

Dubai Islamic Bank, First Gulf Bank, HSBC, Maybank, National Bank of Abu Dhabi, and Standard Chartered Bank acted as joint lead managers. Arab Banking Corporation, Abu Dhabi Islamic Bank, Sharjah Islamic Bank and Union National Bank acted as co-lead managers.

Islamic Finance: unstoppable development

 

The Islamic economic system has had a remarkable development in recent years, attracting the attention of many Western investors (from Europe and USA) who are ready to contend for the enormous financial resources present in the Middle East and South East Asia.

In fact, today, the reality is an Islamic party and a non-negligible possibility by the Western world. Because of a close relationship between the religious and legal parts, terms such as “political Islam”, “Islamic economics”, “Islamic constitution” that reach even to create “Islamic finance” are very common.
This last definition is linked to all those financial instruments that go under the principles and is dictated by Shari’a.
According to the law, the entire Islamic financial system, foresees that only acceptable returns are those generated by the real and non-monetary flow.

 

Islamic Finance: Sukuk bonds

 

The term sukuk is the plural of the Arabic word SAKK meaning “certificate”. The existence of a bond market is crucial for the existence of an economy: on one hand there is an important “transmission channel” of monetary policy while on the other transparency, liquidity and transferability risk interest and credit are increased.
In the Islamic world, however, the presence of the prohibition of riba has greatly hindered the development of sukuk being interest rates going against the requirements of Islamic law.
As time goes by Islamic finance has managed to overcome this obstacle by designing and reproducing the same cash flows of a traditional bond, namely the periodic stream of coupon payments and repayment of principal at maturity.
Everything in the full respect of religious impositions.

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