Saturday, August 04, 2007

Secondary markets grow for sukuk

Although conventional wisdom holds that the secondary trading markets for sukuk are weak, the amount of trading has increased significantly in the previous year. Barclay's Capital, which claims to be the largest market makers in sukuk, says that between $15 million and $20 million in sukuk are traded each day.

While the article focuses primarily on the growing liquidity of sukuk, it also addresses one of the current weaknesses in Islamic finance (both among banks that provide financing and those which issue sukuk), the lack of transparency.
"Also, the companies issuing such sukuk also have to change their mindset as they enter the global debt markets. "By tapping this new source of funding, companies will have to become far more transparent in terms of disclosure of information, and be more open with corporate governance issues, as investors are very conscious about these matters," says [head of credit research at HSBC, Chavan] Bhogaita.

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