As noted in a previous report, “A sovereign sukuk is the centrepiece of Prime Minister David Cameron’s bid to position London as a leading hub for Islamic finance, as competition heats up with financial centres in the Middle East and Asia.” This is what is behind the Cameron government’s utterly supine response to Islamic supremacist aggression and intimidation in the school system and elsewhere: he has to create a hospitable environment for Sharia as part of his plan to make London a global capital of Islamic finance. And if the freedom of speech and equality of rights for women and non-Muslims have to go, so be it.
“U.K. Sells Islamic Bonds in First Non-Muslim Sovereign Issue,” by Lyubov Pronina, Bloomberg, June 25, 2014 (thanks to Peter):
The U.K. raised 200 million pounds ($339 million) from Islamic bonds, with investors bidding for more than 10 times the amount offered as the nation became the first non-Muslim sovereign issuer of the debt.
The notes maturing on July 22, 2019, were sold at a profit rate of 2.036 percent, offering zero spread to the 1.75 percent gilt due in 2019, according to data on the U.K. Debt Management Office page on Bloomberg. Investors bid for about 2.3 billion pounds of the debt, the Treasury said in a statement.
Prime Minister David Cameron announced the plan to sell securities that comply with Islam’s ban on interest on Oct. 29. The sukuk will help London establish itself as a global capital for Islamic finance alongside Dubai and Kuala Lumpur, Cameron said in a speech at the time. The industry is growing 17 percent a year and may be valued at $2.67 trillion by 2017, according to PricewaterhouseCoopers LLP.
“We have seen very strong demand,” George Osborne, Chancellor of the Exchequer, said in a Treasury statement. “I hope that the success of this government issuance will encourage further private sector issuances of sukuk in the U.K.”
Central banks, sovereign wealth funds as well as domestic and international financial institutions received allocations of the issue that will settle on July 2 and be listed on the London Stock Exchange, according to the Treasury. Rental payments on property will provide income for investors, it said.
A “significant challenge” to the sukuk issue was the limited number of suitable government assets to back it, according to Robert Stheeman, chief executive officer at the U.K. Debt Management Office. Such assets need to be unencumbered and directly owned by the central government, he said.
“This wasn’t about trying to generate as much money as possible, it was about trying to send a very strong signal about the U.K.’s commitment to Islamic finance,” Stheeman said at a Euromoney conference in London today.
The sale will serve as a market benchmark for other public or private sector issuers in the U.K., according to Khalid Howladar, global head of Islamic Finance at Moody’s Investors Service.
“While a solid Islamic banking base is necessary to become a true universal Islamic finance hub, there’s no doubt that supporting the industry and its service providers will enable London to maintain a share of the global sukuk market,” New York-based Howladar said in an e-mailed statement today.
Ivan Bogdanov says
Are any financial lurker here can analyse implications on this? Preferably than British type financial lurker. Rest of sheep, particularly sheep with brown spot on nose, please refrain, stick to normal bleating.
More Later….
DragonSlayer says
if you are gonna post, would you be so kind as to make your sentences coherent? Like if ape banana crucial taxi-cab much?
Alice says
Selling their souls to the devil for filthy lucre.
tpellow says
“Petition Launched to Ban Shariah Finance in the UK”
http://www.shariahfinancewatch.org/blog/2014/07/02/petition-launched-to-ban-shariah-finance-in-the-uk/
tpellow says
Also noted by the excellent site, ‘Money Jihad’:-
“Money Jihad Blog:
5 Qataris Who Fund Jihad”-
“Money Jihad blog has an absolute must-read article posted today about the financial support that wealthy Qataris have been giving Jihadists…Keep in mind that these are the folks that the Obama administration got to broker the trade for Bowe Bergdahl and five Taliban leaders…Yet the US still considers Qatar an ‘ally.’
“Note that one of the individuals identified is the notorious Muslim Brotherhood spiritual leader and Shariah scholar, Yussef al Qaradawi…who sits on the Shariah advisory boards of some big banks…”
http://moneyjihad.wordpress.com/2014/06/30/5-qataris-who-fund-al-qaeda/
umbra says
The UK is seeking liquidity not only to fund the government, but primarily to maintain London as the financial capital of Europe.
The UK government along with the London financial sector foresee a liquidity problem in the UK in the very near future. It is becoming increasingly difficult (competitive) to source cheap capital through the traditional market due risks involved with debt laden fiscal policies of many western governments (as seen from the eyes of creditors/lenders). Also, the eurozone has already soaked up a substantial amount of European capital to service ailing economies’ of member state. There is very little cheap capital remaining. Consequently, to ensure that London remains a competitive and leading financial hub in Europe (over frankfurt), the UK is currently seeking alternative sources of funds from wealth gulf states through islamic compliant financial instruments. This initial government islamic bond issue minuscule compared to that which would follow. The UK financial sector is gearing up handle much much more islamic financial instruments that may very well be measured in the hundreds of billions of pounds.
The powers to be welcomes money, any money, including islamic money. Naturally, there will be a (heavy) price to pay sometime down the track.
Nan says
And they already took all the money and property from the Catholic Church so that’s not an option.
umbra says
Yes. Those funds ran out a long time ago.
Also wealth through taxes, trade and tariffs from former colonies that are now independent have long dried up following the breakup of the British empire.
Unless there are large untapped oil/gas fields, precious metal deposits, rare earth metal deposits or another Silicon Valley to be discovered in the UK soon, the UK government and financial sector are rolling out the red carpet for islamic capital.
BlueRaven says
I guess, UK will leave the European Union and join the Islamic states.
Mirren10 says
camoron is a wicked, deluded, greedy fool.
This will make the UK, not the ‘hub of islamic finance’, but the hub of islamic terrorism. As if it wasn’t well on that road already.
Tom W Harris says
“A sovereign sukuk”? Yeah, that sucks alright.
Tahmineh says
The government should use that money to fund mass deportations of people who reject the British way of life.
Robert Wagner says
I am interested in investing in these bonds almost as much as investing in Bit Coins.