UK seeks to become first western country to issue Islamic bonds
Regional-UK, Economics, 4/23/2007

Britain is seeking to become the first country in west to issue Islamic bonds, it was reported today.

Shariah-compliant bonds have previously been issued by the governments of Pakistan and Malaysia and also by corporate issuers around the world but never by a western nation.

Issuing sukuk, or Islamic bonds that make regular payments to investors, is usually considered to be slightly more expensive than raising funds with western-style bonds, because they require extensive, costly legal and religious advice.

But according to the Financial Times, Treasury Secretary Ed Balls was set to announce Monday that Britain was paving the way for the launch of such bonds no later than next year in a bid to bolster London's claim as a center for Islamic finance.

Balls last week reiterated the British government's determination to create a level playing field for Islamic finance products, with UK banks already declaring a range of Shariah- compliant services.

"Balls also believes that today's move will send a powerful message to the Muslim community both in Britain and around the world that the UK authorities are intent on engaging with them in innovative ways," the daily said.

The UK's aim was said to be not only to issue the new bonds on wholesale financial markets but also to use them as vehicles to allow Muslims in Britain to invest in National Savings products through banks and post offices.

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