CAIRO (Reuters) - Egypt is aiming to complete a draft of its first regulations governing sukuk, or Islamic bonds, by the end of this year, and to apply the rules in the first quarter of 2011, its financial regulator said on Monday.
Egypt’s large, mostly Muslim population is a draw for Gulf Arab banks looking to expand in the region. But its Islamic finance industry is still in its infancy and the sukuk market has lagged those of Malaysia, Indonesia and other countries.
Ziad Bahaa El-Din, chairman of the Egyptian Financial Supervisory Authority, said he hoped new regulations for Islamic bonds would help spur fixed-income activity in Egypt.
“What we’re doing here is trying to complete, if you like, the spectrum of activities and instruments that should be available for investors to choose from,” he said on the sidelines of a conference, referring to new sukuk rules.
He added that the legal and regulatory aspects of issuing sukuk were similar to those of conventional bonds, but Egypt’s Islamic bond market still lacked appropriate definitions, disclosure requirements and reporting mechanisms.
“Hopefully by the end of the year there will be a draft, and hopefully by first quarter of next year they will be applicable. They are still in the making,” Bahaa El-Din said.
Sukuk are structured around underlying assets that generate returns to bondholders.
The Egyptian unit of Bahrain’s Islamic lender Al Baraka plans to issue a sukuk to raise up to $150 million next year, the group said last month