JULY 27, 2012 – Kazakhstan’s first Islamic bond issue may be small in value but it’s big in significance for the banking sector
The Development Bank of Kazakhstan, a quasi-government institution, issued the country’s first Islamic bond on July 18, media reported.
Investors snapped up the $76m five-year issue, which carried a yield of 5.5%, and its success should pave the way for a Kazakh Islamic banking sector to emerge.
Importantly, this is also the first Islamic debt issue — or sukuk — by a former Soviet state.
Islamic finance became more important immediately after the global financial crisis of 2008/9, which hit many Western financial institutions hard. With the Eurozone sovereign debt crisis now worrying markets, Kazakhstan’s move towards Islamic financial centres could be a neat piece of pragmatism.
The debt issue was denominated in Malaysian ringgit and most of the buyers, media reported, were based in Kuala Lumpur. Malaysia has emerged as the centre of Islamic finance and piquing interest from Kuala Lumpur-based investors was vital to a successful debt issue.
More Kazakh Islamic debt issues are planned and the success of this debt issue sets a benchmark for the future.
ENDS
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This story was first publish in issue 20 of the weekly Kazakhstan News Extra. For more information click here