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Zawya Sukuk Insight
Global Sukuk monthly analysis
 
Zawya's Sukuk Insight provides a collaborative monthly analysis of the industry and means to identify global Sukuk investment opportunities. REGISTER NOW

May 2010 | Print | Email to a friend

Defaults and the maturing Sukuk market

Ayman Abdel Khaleq
Partner
Vinson & Elkins
Todd Crosby
Associate
Vinson & Elkins
It has been written that the United States Securities Act of 1933 "did not spring full grown from the brow of any New Deal Zeus". Rather, the act was the culmination of centuries of legislation in multiple jurisdictions. While we do not intend to imply that the maturation of a market for an economic instrument is analogous to the evolution of a regulatory system or that the solution to the recent downturn in the market should be the product legislation, the concept of a system growing over time aptly describes the current state of the Sukuk market. Until recently the growth of the Sukuk market has been driven more by an abundance of financial resources than by legal considerations. The current competition for scarce funds across the globe may highlight the importance of the legal considerations underlying financial products, both Islamic and conventional. How Sukuk structures fare in the face of defaults should clarify what they are in a legal sense. This clarity, in turn, may light the path of the maturation process of the Sukuk market... Read Full Story

How to stimulate Sukuk trading

Nish Popat
Senior Industry Expert
During 2009 the Sukuk market has been left in the shadows by the conventional debt market in terms of issuance size as many investors have reverted back to instruments which they understand and for which there is liquidity. 2008 was a year in which all institutions from all industries realised that liquidity was one of the key components that needed to be taken into account when making investments decisions. The Sukuk market is young and growing and that has tremendous potential over the coming years. People tend to forget that the whole Islamic finance industry is one that has grown rapidly in a short space of time. The Sukuk market only shot to prominence in 2006/2007 as investors' thirst for yield during the boom years created a strong appetite for Sukuk .The industry went through an explosive growth period in 2007 and 2008 before coming to an abrupt halt in the middle of 2008. We believe that to improve not only trading in Sukuk but also liquidity, the industry needs to resolve the following points... Read Full Story


Discussions

Mohsin Khawaja
Student
Northeastern University - Boston
Harvard University Islamic Finance Forum
Rachid Ouaich
Director
Wafra Capital Partners (Islamic structured products)
Luxembourg - a place of choice for islamic products
 » View More
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