The invitation, the treasury said, is in line with its intention to diversify its funding and investor base. "There is a great interest in the Sukuk market and this is the first step towards meeting the growing appetite for government backed Shariah compliant investments," Treasury director-general Lungisa Fuzile said in a statement this week.
The successful bidder will be required to provide advice as well as to structure, manage and coordinate the issuance of the Islamic bond. It will also be responsible for obtaining relevant regulatory approvals, as well as securing a listing for the bond - both locally and internationally. In addition, SAinfo Reports, the successful bidder will have to market the bond to investors, indicate underwriting and market-making appetite, facilitate the book building process and provide any additional services required to launch the bond successfully.
Quoting from online encyclopaedia Wikipedia, SAinfo explains that, in accordance with Islamic law, where fixed income, interest-bearing bonds are not permissible, Sukuk securities are structured to comply with permissible investment principles, which prohibits the charging or paying of interest: "Sukuk can be structured alongside different techniques. While a conventional bond is a promise to repay a loan, Sukuk constitutes partial ownership in a debt, asset, project, business, or investment," Wikipedia states. Interested service providers should submit proposals by 21 December 2011, with the shortlisted bidders set to be informed by 20 January 2012.
Read the full article on www.southafrica.info.
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