Egypt expects sukuk rules in place by June

Egypt is likely to finalise regulations that allow local companies to issue Islamic bonds by the end of June, a much awaited move that is expected to boost market liquidity, according to the country's top regulatory official. A law regulating sukuk issuance in Egypt has been talked about for several years, but the move to implement one now is gathering momentum after the strong emergence of Islamic political parties following the revolution in 2011. Rules for allowing companies to issue sukuk will be in force "hopefully by the end of June", once the second draft is sent to the prime minister for approval, Ashraf Sharkawi, head of the Egyptian Financial Supervisory Authority, told Zawya Dow Jones. At the moment, an amendment in the executive regulation under the capital markets law is needed before allowing the issuance of sukuk. Sharkawi added that sukuk would help improve liquidity in the Egyptian market, where the instruments will be listed. The Egyptian Exchange already allows companies to list conventional bonds, with the number of corporate bond issues listed on the exchange reaching 16 at the end of last year, according to an Egyptian exchange spokesperson. The spokesperson added that the next step might be the trading of sukuk on the market. ‘Much needed boost' Last month, the EFSA said it submitted a draft to amend the country's capital market law to regulate sukuk and is awaiting approval from its board of directors and the minister of investment, according to a statement posted on the regulator's website. It also sent the draft to bodies and market institutions concerned with sukuk, the regulator added. Analysts say the potential for a developed sukuk market in Egypt is significant and something that will likely be facilitated by a majority-Islamist parliament. The chairman of the country's stock exchange in February told Zawya Dow Jones that issuing sukuk would be a much-needed boost for liquidity in the market and vital for attracting Gulf investors, who are among the most active sukuk investors. Sukuk totalling about $18.5 billion (Dh67.9 billion) were issued in the Gulf Cooperation Council last year, a sharp increase from $6.4 billion in 2010, according to Zawya.com data.