Bloomberg eyes Malaysian sukuk market with MYR index launch

Bloomberg has announced the launch of a Malaysian Ringgit (MYR) corporate sukuk index, developed with the Association of Islamic Banking Institutions Malaysia and Bursa Malaysia, which will serve as a benchmark for investors of ringgit-denominated Islamic bonds in Malaysia, the world’s biggest sukuk market.

“Global demand for corporate and sovereign sukuk has grown over the last decade and in Malaysia, as low borrowing costs continue to drive issuance. Malaysia is having a record year for sales of corporate sukuk, with potentially about 20bn ringgit of Shariah-compliant debt in the pipeline,” Bloomberg said.

The new corporate sukuk index will track and measure the performance of the most liquid and credit-worthy Islamic corporate bonds in Malaysia. Bloomberg will calculate the Index daily, with rates and prices contributed by member banks of AIBIM.

This is the third sukuk index Bloomberg, in collaboration with Bank Negara, AIBIM and Bursa Malaysia, has developed for the Malaysian market.

In 2011, Bloomberg launched the AIBIM Bursa Malaysia Sovereign Index (BMSSITR) and the Malaysia Sukuk Ex-MYR Index (BMSSUTR), as part of its Islamic Finance Platform (ISLM), a broad set of data, analytics and news dedicated to Shariah-compliant products and services.

“With the diversification of the Islamic finance market, there is a growing need for access to accurate, timely and comprehensive data. Strategic collaboration to develop localized financial products will help stimulate the long-term growth, competitiveness and sustainability of Islamic finance services,” said Dato’ Mohd Redza Shah Abdul Wahid, president of AIBIM.

Meanwhile, the Islamic Financial Services Board and the International Organization of Securities Commissions (IOSCO), warned today that the growing recognition of the increasing significance of the Islamic capital market has triggered the need for stronger oversight, greater transparency and more robust disclosure requirements, global standard-setters and senior regulators acknowledged today.

“As the Islamic capital market expands and becomes more global, it is increasingly important that issues surrounding investor protection and market integrity are addressed from a cross-jurisdictional perspective. It is therefore critical for regulators and standard-setters such as the IFSB and IOSCO to further examine disclosure regimes for Islamic capital market products, with a view to allowing more informed investment decision-making and to promote the further growth of the Islamic capital market,” said Datuk Ranjit Ajit Singh, vice-chair of the IOSCO Eemerging Markets Committee.

Jaseem Ahmed, secretary general of IFSB, said that promoting cross-border financing and investment through Islamic finance is critical to attaining the depth and scale in Islamic capital markets needed to be competitive.

“This will require the adoption of robust regulatory and disclosure practices that give confidence to investors and consumers alike. IFSB hopes that this collaboration with IOSCO will facilitate a process leading to a set of practices that could be harmonised or mutually agreed upon,” he said.

Photo: Bursa Malaysia

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