Call for sukuk investors’ protection - The National Newspaper

Dubai and other regional financial centres need legal systems that protect Islamic bond investors in the event of a default, a top Islamic scholar says.

“What good is it in the event of a default if you can’t have access to the underlying assets?” said Rifaat Abdel Karim, the secretary general of the Islamic Financial Services Board, a body based in Kuala Lumpur that sets standards for Sharia compliance. “As an investor you need to know what you get.”

Several defaults on Sharia-compliant bonds, or sukuk, during the global financial crisis have tested their young legal structures for the first time. The Investment Dar, a Kuwaiti company that owns half of the British luxury car maker Aston Martin, was first in the Gulf to default after it missed a regular payment on a US$100 million (Dh367.3m) sukuk last May. Saad Trading, Contracting and Financial Services, part of Saudi Arabia’s Saad Group, defaulted on a $650m sukuk last November.