The financial services industry is bereft of sukuk-issuance news this year, reflecting sober demand for so-called Islamic bonds from institutions based in the Islamic world. Yet we expect to see greater enthusiasm for the asset class among local and regional investors. Consider the worldwide scramble for yield and the attendant focus on infrastructure investments. With asset-backed features, sukuk are a natural ally of energy and transportation projects. Another development is the advent of the Islamic pension fund. Malaysia’s Employees Provident Fund—the manager of a compulsory savings program—just announced that it will allocate $25 billion to Shariah-compliant assets on a segregated basis. Sukuk are their default choice. Other institutions will follow. Historical growth in Islamic retail banking now paves the way for Islamic retirement planning. ■
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