THE FIRST Sharia- (Islamic law) compliant bond in the western world was launched in London yesterday and immediately attracted £2bn in orders, more than 10 times the amount it was looking to sell.
The government raised £200m from the five-year sukkuk (bond) issue, part of an bid to boost the UK as a centre for Islamic finance.
Chancellor George Osborne said he hoped the deal would spur more corporate issuance of Islamic bonds, which cannot pay interest but instead offer a fixed profit stream based on underlying assets such as property.
“Today’s issuance of Britain’s first sovereign sukkuk delivers on the government’s commitment to become the western hub of Islamic finance and is part of our plan to make Britain the undisputed centre of the global financial system,” he said.
Law firm Linklaters advised the government on the issuance of the bond. Neil Miller, its global head of Islamic finance, said: “The UK is one of the world’s major economies and this sukkuk, delivering on past expectations, is a significant statement of support by the government for the United Kingdom as the most important centre for Islamic finance outside the Muslim world.”