Goldman Sachs is planning to issue its first Islamic bond, or sukuk, and intends to meet potential investors in Qatar and the United Arab Emirates next week.
According to the FT, the issuance is expected to consist of five-year bonds with a combined value of $500m. The US bank will be the second financial institution to issue Islamic bonds, after HSBC became to first global bank to offer them in 2011.
Goldman Sachs originally attempted to issue a sukuk during the same year as HSBC, but failed because of industry scepticism and criticism about its structure. It is thought that the new issuance has been adapted to fit requirements.
Besides the bank itself, those involved include the National Bank of Abu Dhabi, Dubai’s Emirates NBD Capital.
As Islamic finance becomes an increasingly important part of Middle Eastern and Asian economies, the demand for Islamic bonds is growing. For this reason, other global banks are also expected to start issuing sukuks soon.
“The fact that non-Islamic countries are joining Islamic nations in sovereign issuance is globalising the market,” said Khalid Howladar, Moody’s global head for Islamic finance, told the FT.
“Given growth projections, Goldman and other non-Islamic institutions can – just like London and Hong Kong – also establish relevant Islamic finance structuring credentials.”