Absence of Saudi Arabia, Bahrain deprives IILM of key markets but peripheral Islamic markets should benefit

The absence of Bahrain and Saudi Arabia from the IILM deprive the institution of entry to key markets for Islamic finance, and may have cost the institution its top rating. While the reason for Saudi Arabia’s withdrawal, it could be due to concern over the possible use of IILM sukuk in Islamic repo transactions, or fears that the IILM sukuk program might curtail commodity murabaha participants profits. Even Qatar, which is more involved in the IILM as a result is showing signs it may not be confident in the IILM’s ability to succeed where others have failed by announcing its own plans for regular sovereign sukuk issuance.

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