Nov 30 2011
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Kenya maiden sovereign Sukuk to be part IF
The country has for several years toyed with the idea of issuing sovereign Sukuk, but the post election violence of 2008, which affected its sovereign rating and the financial instability in Europe and the US, where most of the buyers were expected to come from, saw the government's plans shelved.
However, S&P's and Fitch Ratings raised the sovereign rating of Kenya late last year, citing a reduction in political tensions, the agreement of a new constitution and a growing economy. This saw the idea of issuing a sovereign Sukuk put back on the political agenda and Kenya Treasury officials agreed to issue the Sukuk to take advantage of lower offshore borrowing costs.
The debate now, the source said, was whether to make the whole dollar-denominated sovereign Sukuk Shari'ah compliant or only part of it. The Capital Markets Authority is presently in consultation with the industry to decide on relevant laws to make part of the Treasury bond issues Shari'ah compliant.
"The visit marked the beginning of increased investments to Kenya from the UAE especially in infrastructure developments," Isaiah Kabila, head of presidential press unit said.
Kibaki held talks with UAE's president and ruler of Abu Dhabi, Khalifa bin Zayed al-Nahyan and prime minister of UAE and ruler of Dubai, Mohamed bin Rashid al-Maktoum, and met with members of the Abu Dhabi Chamber of Commerce.
Kenya requires money to finance its widening budget deficit, the implementation of its new constitution, which created a number of new state offices, its unbudgeted war in Somalia and its ongoing infrastructure development. The country is also seeking to balance its source of development capital, most of which is currently coming from China in the form of concessionary loans.
© The Islamic Globe 2011
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