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"London gives investors the reassurance that the bond is worth buying as it is a mature, highly regulated market that gives credibility to a deal."
Eurabia Alert, and an update on this story, from the Financial Times:
The first government sukuk was listed on the London Stock Exchange as Britain reaffirmed its reputation as the main western centre for Islamic finance.
Bahrain chose London to list its second Islamic bond as it sought to encourage more European and conventional investors to buy the paper. The Gulf kingdom listed its first sukuk in Luxembourg in 2004.
Significantly, more than 50 per cent of the paper was bought by European investors with the rest mainly bought by banks based in the Middle East.
Rizwan Kanji, head of Middle Eastern capital markets at Norton Rose, the law firm that helped structure the transaction, said: "You can attract more investors, particularly in Europe, if you list in London.
"London gives investors the reassurance that the bond is worth buying as it is a mature, highly regulated market that gives credibility to a deal."
The $350m Bahrain bond, structured to avoid paying interest in line with religious laws, raises the amount of sukuk on the LSE to $11bn. Investors are paid rent from underlying assets, in this case Bahrain's dry docks, instead of interest.
"London gives investors the reassurance that the bond is worth buying as it is a mature, highly regulated market that gives credibility to a deal."
The $350m Bahrain bond, structured to avoid paying interest in line with religious laws, raises the amount of sukuk on the LSE to $11bn. Investors are paid rent from underlying assets, in this case Bahrain's dry docks, instead of interest.
Britain has led the way as a western centre for Islamic finance with government reforms designed to help level the playing field for fund-raising in the wholesale markets and moves to encourage Muslim home-owners to buy Sharia-compliant mortgages.
Ministers are also considering launching a UK government sukuk, which would be the first western sovereign Islamic bond.
The Bahrain deal is also a sign the sukuk market is still active in spite of the credit squeeze, although the issuing price was much wider than this time last year. The five-year bond was priced at 75 basis points above US Libor. A similar bond would have issued at a spread of about 35bp in March last year.
Posted by Marisol at March 21, 2008 11:20 AM
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What the heck does this really mean:
The $350m Bahrain bond, structured to avoid paying interest in line with religious laws...
If, after a period of time, you pay more money back than you borrowed, you paid interest, no matter what it is called.
If I have money to lend, and you give me your cow as collateral, and, to get the cow back you pay me more than you borrowed, you paid interest.
What am I missing?
Posted by: Ethelred![[TypeKey Profile Page]](http://www.jihadwatch.org/dhimmiwatch/nav-commenters.gif)
at March 21, 2008 12:33 PM
"If you can tell which shell covers the pea, I will give you a dollar."
"If you can't, I will take your dollar."
Of course, if there is no pea - it is a zero-sum game.
Posted by: tanstaafl at March 21, 2008 12:36 PM
Perfidious Albion.
Posted by: jsla at March 21, 2008 12:44 PM
"The $350m Bahrain bond, structured to avoid paying interest in line with religious laws, raises the amount of sukuk on the LSE to $11bn. Investors are paid rent from underlying assets, in this case Bahrain's dry docks, instead of interest."
-- from the article above
The "rest" from the "underlying assets" is a transparent ruse; such a rent is calculated to be exactly what would be the interest on similar, but non-Islamic, bonds.
It is not an economic statement, but a political one. See Timur Kuran, who has dissected the significance of "Islamic finance" and from whose works excerpts have been put up at this website before.
at March 21, 2008 12:47 PM
OT, but speaking of dhimmis can you believe this:
http://byzantinesacredart.com/blog/2008/03/dutch-fascist-ban.html
at March 21, 2008 12:49 PM
Hope the bond holders get royally burned, then people will really start to associate sharia'h with bad.
Posted by: Dumbo at March 21, 2008 1:54 PM
So that's why they're allowing Britain to become Islamic.
Posted by: Voltaire at March 21, 2008 2:53 PM
The ways that muslims avoid interest in loans is funny and phoney.
My favorite purveyors of Islamic opinion are the denizens at Ask Imam. Here is how they get by without interest.
I have excerpted a question and answer from this longer Q&A.
http://www.islam.tc/ask-imam/view.php?q=13193
Question
"2nd question:For example if I buy a refrigrator in 150 euros in one payment but for monthly payements it is of 220 euros. It is permitted in Islam???"
Answer
"2. In the way it is generally structured nowadays, it is not permissible. However, if the seller clearly states that the selling price is 220 euros payable over six months, for example, this would be permissible."
As I understand this sly way of doing business. One goes to purchase a big ticket item. The seller calculates the total interest over the duration of the loan. This larger figure now is the selling price. Abracadabra, the loan is now interst free.
As phoney as their religion.
I am clueless as to how a Sharia bond could be beneficial to the bond holder. Please, don't tell me because I really, really don't want to know.
at March 21, 2008 3:00 PM
Hey, if the buyer of the refrigerator defaults on the payments, can the seller collect on the balance of the 220 Euros price instead of the balance on the 150 Euros?
He, he, I smell an opportunity.
Posted by: Pelayo at March 21, 2008 3:28 PM
sHARIA BANKING ISNT THE ONLY CURSE THE MOSLEMS ARE BRING TO THE OLD BLIGHTY
Doctors in Glasgow are treating Scotland's first diagnosed case of the drug-resistant XDR tuberculosis strain.
The man who has the XDR-TB strain is reported to have come to the UK from Somalia. He is now in isolation at the Gartnavel General Hospital.
The "super strength" strain of the disease is extremely resistant to traditional antibiotics and has to be treated with a cocktail of drugs.
WHICH NO DOUBT WILL BE PAID FOR BY THE HARDWORKING TAX-PAYER
http://illustratedpig.blogspot.com/2008/03/jihad-mutates.html
Posted by: Shiva at March 21, 2008 4:07 PM
UK why not just convert now? Submit. You're doing a great job of it so far.
Posted by: Sounder at March 21, 2008 4:54 PM
Islamo-Magic!
If you just call "interest" "rent", then it is!
And if you just call beheading people "peaceful", then it is!
And if you call such insanity self-deluded madness, then you're an Islamophobe!
Posted by: profitsbeard at March 21, 2008 8:01 PM
The $350m Bahrain bond, structured to avoid paying interest in line with religious laws, raises the amount of sukuk on the LSE to $11bn. Investors are paid rent from underlying assets, in this case Bahrain's dry docks, instead of interest.This sounds more like a REIT than a 'bond', since the income earned is from 'rent', a de facto dividend income, but they call it a "bond". That's the invert logic of Islam, call a cow a horse and so it is now a horse! Such primitive financial arrangements have no place civilized advanced market places, but are best left at the suk.
"You want to buy a nice carpet?.. It is a Persian made in Bali, but a true Persian carpet indeed!.. Make me an offer, price not an object..." You know how it goes, all lies flavored with sweet tea and solicitous smiles to the kafir until they take his money, then they spit on the floor as he leaves.
Posted by: Battle_of_Tours
at March 22, 2008 12:23 PM
There's nothing intrinsically wrong with buying these things, anymore than Kuwaitis buying US Treasury notes.
All the panic-mongers should STFU and keep their eye on the really important aspects of Islamic *force-projection*. I.e., jihad. There is no force involved in selling investment paper (no matter how worded), and consequently nothing intrinsically unethical about it.
Posted by: Mike Schneider at March 23, 2008 1:55 AM
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