REUTERS: DUBAI - Since a revered Islamic scholar spoke out against some sukuk structures more than a year ago, issuers have refocused their attention on the ijara Islamic bond model, bankers said on Wednesday.
Some bankers have attributed last year's downturn in issuance of sukuk, the Islamic alternative to Islamic bonds, to comments by Sheikh Muhammad Taqi Usmani that musharaka and mudaraba sukuk should not promise guaranteed returns.
Most Islamic bonds should be treated as equity instruments, said Usmani, chairman of the board of scholars at the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
His February 2008 comments marked a shift for Muslims seeking fixed-income returns and, in the following months, coincided with a slowdown in the sukuk market as the global financial crisis deepened.
But bankers at the Reuters Islamic Finance Summit on Wednesday downplayed that link, saying the general slump in the global debt market was behind the drying up of sukuk, not a fear the structures failed to comply with the spirit of Islam.
"The sukuk market has shrunk as a direct result of the market conditions rather than an issue with the structures themselves," said Raphael de Ricaud, head of Islamic finance at Rothschild, an investment bank providing advisory services. >>> By Daliah Merzaban | Wednesday, April 15, 2009
