DUBAI, May 22 (Reuters) - Egyptian marine services firm Maridive and Oil Services
The Maridive loan is considered one of the largest in the country's challenging banking sector, according to law firm Crowell & Moring which advised on the transaction.
The deal could give assurance to the market that ijara is applicable in Egypt, encouraging firms to use it for other types of transactions including sukuk, or Islamic bonds, a growing funding source for both corporate and sovereign issuers.
Egypt's Islamist-led government is keen to develop Islamic finance and earlier this month President Mohamed Mursi approved a law allowing the state to issue sukuk.
An earlier draft of that law triggered a dispute with Al-Azhar University, the country's top religious authority, casting doubts over which Islamic instruments would be allowed.
The government hopes the law will allow it to tap billions from the Islamic bond market and bolster state finances which have deteriorated in the two years since an uprising ousted President Hosni Mubarak.
Egypt is also trying to secure a $4.8 billion loan from the International Monetary Fund to support its ailing economy.
Islamic finance contracts such as ijara must abide by religious principles such as a ban on interest and pure monetary speculation.
In an ijara one party leases a specific asset to a client for an agreed rental price, but unlike an operating lease a lessor cannot charge interest on defaulted or delayed payments.
In addition, in an ijara the cost of acquiring the asset is usually not amortized during the leasing period, the lessor must own the assets for the full lease period and be responsible for bearing the maintenance costs of the asset.
Abu Dhabi Islamic Bank Egypt
(Reporting by Bernardo Vizcaino; Editing by David Cowell)
((Bernardo.Vizcaino@thomsonreuters.com)(Tel: +9715 6655 7225)(Reuters Messaging: bernardo.vizcaino.thomsonreuters.com@reuters.net))
Keywords: ISLAMIC FINANCE/EGYPT
