Singapore: Duet Mena and Algebra Capital, Dubai-based managers of $500 million (Dh1.8 billion), said they may buy Islamic bonds from Malaysia's Cagamas, the first under a new structure that complies with the Arabian Gulf's stricter religious laws.
Cagamas, the nation's biggest mortgage holder, plans to seek funds in the oil-rich region by offering 5 billion ringgit (Dh5.7 billion) of notes that meet the guidelines of the Bahrain-based Accounting & Auditing Organisation for Islamic Financial Institutions.
Fatwas, the judgment of a scholar based on his interpretation of Sharia, from Malaysia aren't generally accepted in the Middle East.
Demand from Dubai investors would benefit borrowers in Malaysia, the largest Asian sukuk market. Saturna, the Mal-aysian investment fund whose Washington-based parent oversees $3 billion of Islamic assets, said it is counting on the sale to attract funds from the Middle East.
"This is a big step forward and we will definitely be interested," Rabih Sultani, who helps oversee $200 million at Duet Mena, said in an interview on Wednesday. "We had been reluctant to invest in Malaysia because of the different structure."
Financial practices
Global standards are still developing in the Islamic finance industry, whose assets may almost triple to $2.8 trillion by 2015, according to the Kuala Lumpur-based Islamic Financial Services Board. AAOIFI's Secretary-General Mohamad Nedal Al Chaar said in May that his body planned to introduce the initiative to screen products and encourage greater harmonization of Islamic financial practices.
"This is the first time, as far as we know, that anyone, anywhere, has managed to bridge the Sharia laws in Malaysia and the Middle East," Cagamas Chief Executive Officer Steven Choy said in an interview yesterday.
